How to Grow Stronger During a Financial Crisis

Financial concerns plague over 70% of business owners across the UK, Australia, Canada and Ireland. Many business owners are therefore preparing for a recession. Peninsula Group’s CEO and founder, Peter Done, recently spoke to Forbes to give his insights about the secrets to surviving a financial crisis. Here, he offers his advice on how to use such a crisis to identify your strengths and build on them.
Invest in your strengths To emerge on the other side of financial hardship, it’s likely you will need to cut back in some areas. This often involves lay offs or reduced investment. Businesses that are quick to slash costs may well survive. Go too far, however, and you’ll find that the recovery process is much slower. That’s because you are essentially starting from scratch. It pays to be particular about how you cut back. Overdoing it means you evade immediate risk in favour of a slower decline.
Ultimately, it means you’re putting yourself in a weaker position once the economy recovers. The cost of re-hiring and retraining replacement staff later can be devastating. And, often, lay offs can leave a dent in morale that’s tricky to repair. If your business prides itself on excellent customer service, keep your people onboard. If you are renowned for quality, be strict about maintaining this. The bottom line is to prioritise your strengths and keep investing in them. This places you ahead of your competitors who cut back.
Of course, this doesn’t answer the question about cutting costs. But instead of removing essential business functions, rethink them and adapt.
Adapt your business strengths You may start to see more and more consumers cut back on non-essential costs. That’s an inevitable consequence of inflation. Think about if you provide an essential service or product. If not, you’ll need to change either your product or the way you sell it. Otherwise, your consumers’ plans to cut back could result in your downfall.
If you specialise in a niche or luxury field, consider how you can adapt to deliver a stripped-back or more accessible variation.
During the pandemic’s “stay home” orders, a Michelin star restaurant did this brilliantly. With their customer base firmly at home, the restaurant abandoned its £100 per person menu and began flipping premium burgers to take out. While they still used the finest ingredients to maintain their luxury reputation, the lower price point (£16 per meal) appealed to a much wider audience.
Doing this removed the financial barrier for many consumers. While the restaurant’s USP was off the table, the staff could use their existing skills to meet a different demand — and a bigger audience.
While this is a simplistic example, we can take multiple lessons from it.
Fast reflexes and the ability to adapt are paramount to survival. Businesses that are slow to pick up on changes to their audiences’ needs can be the first to collapse.
With an agile workforce, you can quickly shift and switch to suit demand. And that allows you to not only survive, but to seek out new opportunities when they arise.
Whether you expand your range, roll out more affordable options or even provide new ways to pay, diversifying your business is often essential if you want to survive.
Pull apart your pathway to profit There are many ways to rethink and adjust your usual path to profit. While this will depend on your line of work, you’ll need to carefully pick apart your entire customer journey — and ask yourself whether you can make efficiencies along the way.
For example, you could:
harness the power of automation. With tools that free your staff from mundane admin tasks, you allow them to focus on more meaningful work. This means you pay your staff to optimise and add value to your business
assess your payment options and pricing model. If you provide a service, consider offering fixed-fee terms. The stability of fixed terms not only provides reassurance to customers during times of instability, but it delivers security for your business too. This allows you to plan ahead without taking financial risks. Conversely, if you currently only offer fixed terms, consider offering shorter or one-off deals. This would appeal to customers who don’t want to be locked down if they’re uncertain about their own financial future. Providing a variety of options helps you appeal to more customers and expand your reach
consider your cost per sale. Are you spending too much on marketing? By prioritising customer retention over new business, you recoup what you’d spend to attract new custom. This could be as simple as offering referral rewards or discounts for returning.
Those are just a few ideas to re-strategise. Only you will know what will work for your business — but the bottom line is to be creative. At times of crisis, it’s riskier to continue on the same course than it is to explore new ideas.
There will always be many ways you can adapt and streamline your operations without losing sight of your strengths and principles. By holding onto these, you won’t fall behind the competition by the time the economy recovers. Because it will, and when it does, you want to put yourself in the best possible position to grow and succeed.
Contact Ashored for more information and support with your Business.