If you run a business of any shape or size, an economic downturn is possibly the last thing you need. A recession usually means that businesses contract, or, worse, go bankrupt as the economy recedes.
In the UK, business insolvencies already hit a 13-year high in 2022, with 5,629 insolvencies in the second quarter of the year, according to figures from the Office of National Statistics. Many might rightly wonder how it’s possible to either grow a small business in a recession, or expand a small business in times of crisis, but these tumultuous conditions might give rise to a numer of unique opportunities.
The challenges in running a business during a recession
Perhaps the most significant challenge for businesses during a cost of living crisis is the decreased demand for their products or services. Maintaining a steady flow of business is important but managing declining revenue for the products you need and the goods or services you sell is the biggest pain point for businesses of all sizes during tough economic times. Indeed, a business’ customers are likely trying to manage just the same, according to Michelle DeBella, chief financial officer at JumpCloud.
“At the same time, you have to support your staff and help them to be effective and productive in their jobs – and that may need investment,” DeBella says. “Providing a great working environment is an essential requirement here, as it helps to let your employees know how much you value them and their work.”
There’s often a catch-22 situation facing small and medium-sized businesses (SMBs) during a downturn, adds Anastasios Papadopoulos, co-founder and CEO at IMS Digital Ventures. This is the need to invest to stay afloat, given the limited budget for investment. Decision makers will be looking at their profit and loss (P&L) statements to see where they can cut costs or where they need to reallocate the budget. All the while, they’ll be under pressure to continue investing in digital transformation efforts that are crucial for long-term growth and survival.
This content was originally published here.
