....It's getting worse!
Recession has been the spectre looming over us all since 2008 and it's getting worse again.
But what is a recession? The technical definition of a recession is a decline in GDP (gross domestic product) for two or more consecutive quarters. By that measure, Southern Ireland is now officially in a recession and the UK is nervously looking over the precipice. We're not there yet, but it could be coming.
But the problem is that psychologically, we are already in meltdown mode and everyone's new favourite phrase is "credit crunch." In 2008, our eyes and ears were continuously assaulted with overwhelming evidence of doom;
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UK retail sales dropped to a 25-year low in July,
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US investment bank Lehman Brothers collapsed after 160 years in operation,
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AIG, the world's largest insurer, was nationalized by the US government to prevent its failure,
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Bradford and Bingley, the UK's biggest buy-to-let mortgage lender, was nationalized,
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Mortgage lending and house sales were at the lowest levels for years,
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In October 2008, the UK stock market had its biggest falls for 21 years...
It's too easy to listen to the doom and gloom every day and sink into a sea of negativity, but let's look at this thing from another angle; we are going through difficulties, which are likely to get worse, but we know that at some time in the future, in the words of the song, "Things can only get better."
So the key, both personally and if you own a business, is to think long-term - and think positively! Stuff happens - it's how you react that's important. For business owners, mindset is key to success, so here's a thought to consider...
RECESSION IS GOOD!
It sounds a little brutal, especially if your business is struggling, or you have recently lost your job and are struggling to pay bills. But it's true! Over the long-term, recession is good for an economy, cooling down overheated market sectors and removing weaker operators. For an individual business, recession can be good because;
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It eliminates laziness - businesses and their employees have to work harder to survive in difficult times.
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It removes complacency - it's often too easy to make money during the good times. In hard times, businesses need to be smarter and more focused in order to succeed. A client who runs a small carpet retail outlet recently told me that, although his sales were not increasing, his profits had improved because the difficult trading conditions had forced him to run the business more efficiently.
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It creates opportunities - weaker competitors will fail, certain types of business will thrive (discount supermarkets, pawnbrokers and gold traders are currently seeing record levels of business) and changing times and customer needs will create potential market opportunities for new businesses to be launched.
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Act quickly. Look for ways to reduce costs and inefficiency, without compromising the business.
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Reduce debt levels, avoid taking on other debts and reduce the cost of existing debt.
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Get closer to your customers. Find out what they really want from you.
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Get closer to competitors. Copy their successes, avoid their errors and pick up their business if they fail.
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Diversify - look for opportunities created by the changing economic environment.
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Keep marketing and selling. If you are not making enough revenue, sell more.
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Keep working on your business and looking for ways to improve it.
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Get help. Organisations such as Business Link are there to help - use them.
Michael Barrows is a business consultant, providing business consultancy services in Birmingham. Get some great advice on how you can improve your business, including tips on surviving the recession, by going to the Matrix Marketing & Management website.
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