While times remain tough, an eventual economic upturn is inevitable, and it may come sooner than expected. GrowthBusiness finds out how you can be prepared.
At last, there are reasons to be cheerful – strong economic numbers coming out of the US, the prospect of a resolution to the Greek debt crisis and a consensus among economists that any recession this year will be shallower than an episode of Big Brother.
Businesses that have retreated into a recessionary bunker might be well advised to think about how they are going to dig their way out, and take full advantage of any improvement in the wider economy. With this in mind, we present Business XL’s guide to positioning your company for the prospective recovery.
1. Stop firing, start hiring
While redundancies may still be widespread, some employers are focusing their HR efforts on recruiting staff who will enable them to win business. Simon Corbett, managing director of tech PR agency Jargon PR, comments, ‘When the recovery will come is debatable, but regardless of this, to capitalise on it you need to make sure that you have the correct team in place. We recently employed an ex-Gartner analyst and an ex-Financial Times journalist. They add huge credibility to the agency, are experienced in their respective fields and allow us to stand out from other agencies.’
2. Say thank you
During a downturn, staff loyalty may be taken for granted, but when a recovery comes people tend to jump ship just when you need them most. Rachel Clacher, founder and director of call-handling business Moneypenny, comments, ‘We believe very strongly in saying thank you to people, so we have all sorts of different rewards in place.’ These include cash bonuses and boxes of chocolates for star sales staff, and the best car parking spaces are given to the longest-serving employees. Andrew Jupp, a director at accountancy group Smith & Williamson, counsels companies to ‘explore innovative ways’ to incentivise their workforces, especially where straight pay rises are impossible. ‘Share values are relatively low at the moment, particularly in private companies, so now may be an excellent time to implement or enhance share incentive schemes,’ he hints.
3. Take on temps
If you’re not bullish enough to bring in new recruits on a permanent basis, you could follow the lead of corporate finance firm SI Partners and take on more staff on flexible contracts, enabling you to scale up (or down) as required. SI’s managing partner, Charles Fallon, believes that companies should consider switching 15 to 20 per cent of their workforce onto flexible contracts, rather than relying on freelancers. He remarks, ‘Freelancers offer companies a great way to scale resource, but if a large proportion of your workforce is freelance then you may find that loyalty levels in the business fall. Flexible contracts offer businesses all of the benefits of freelancers while giving employees the sense of belonging.’
4. Overhaul your IT
Retailer Heron Foods, which has around 160 branches in northern England and the Midlands, decided it was time to design and implement a new system for managing stock. Before the upgrade, the shop chain relied on inter-branch updates using outdated connectivity that allowed no more than a daily bulletin, making it difficult to respond to customer demand. IT manager Gary Johnson relates, ‘We’ve gained the ability to better respond to local customers’ buying behaviour and ensure that we stock the items they want – which can only be good news.’
5. Go mobile
While most retailers have caught up with the internet and offer online purchasing, many have still to launch mobile-optimised websites. Tony Preedy, marketing director of kitchenware retailer Lakeland, says, ‘Our website detects mobile devices connecting to it and dynamically switches to serving the site through optimised templates for display on small screens.’ It’s all part of giving customers ‘the best possible online shopping experience’, he adds. Scott Storey, managing director of systems provider CTS Retail, comments, ‘We have noticed that an increasing number of retailers are enquiring about mobile capability as consumers continue to drive forward m-commerce as a critical sales channel.’
6. Join forces
Recruitment consultant Smart Solutions recommends forging links with other companies, even if these are purely on a social level at first – for example, the 55-mile charity bike ride in which the firm recently participated with two other companies. ‘Coming together with other organisations helps improve relationships and can lead to all-important business referrals,’ remarks chief executive Nathan Bowles, who is already planning similar events for the coming year to ‘engage the local business community and raise money for charity’.
7. Pull off a marketing stunt
There are now more channels than ever through which to market your product or service, but it’s notoriously difficult to grab customers’ attention. One company that has achieved this is Hampshire-based firm Social Media My Business. The company, which trains businesses in using social media, has purchased a 1981 Bedford Camper Van and is travelling the length and breadth of the country offering businesses free help with Facebook marketing. Co-founder Lee Fuller says that since 11 January, the firm has had more than 200 small businesses apply for its tour. ‘The aim is to prove we can help them,’ he adds.
8. Spread your wings
In an effort to propel their companies towards further growth, Localstars, a digital advertising business, and recruiter Smart Solutions recently opened new offices in advantageous locations. In October, Localstars opened a new London headquarters near Tech City, an area in the east of the metropolis that has become synonymous with digital, media and tech companies. ‘Tech City was the natural choice for our new London HQ as it provides us with access to a vibrant and exciting ecosystem that will help us expand even faster,’ comments managing director Chris Bunyan. About 150 miles away in Swansea, a city recently listed as the second-best UK location for business growth in a Royal Mail survey, Smart Solutions opened a centre. ‘The city has recently experienced a mini economic revival, and we expect this trend to continue,’ says director of operations Ieuan Rosser.
9. Expand virtually
Opening new offices is expensive and not always feasible. Letting agency Letco, based just outside Southampton, found a way to expand geographically without having to invest in property or new staff to man new sites. It spread itself across the south of England and even into the capital by investing in a service from a major phone network that allowed the company to combine its fixed and mobile communications. Through the service, Letco got landline numbers for other cities – including London – and can now pick up incoming calls from the Southampton headquarters or from a mobile phone. Founder Oliver Warren comments, ‘In the property market these days, something like 80 to 85 per cent of people will use the internet as an information source, and don’t really want or need to walk into an estate agent shop. The company is now represented in four additional cities, including a virtual presence in London.’
10. Enter into exports
‘Market data is now suggesting that there is a real opportunity for manufacturers to grow their exports in 2012,’ says Paul Bennett, managing director of Fascia Graphics. The firm, which specialises in producing membrane keyboards, set up a dedicated export division 18 months ago to capitalise on overseas opportunities. ‘Although the first few months were a slow burn, there has been a significant upturn in orders from the US, Asia and across Europe,’ reports Bennet. He believes that the move has enhanced the company’s reputation as well as sales, and advises, ‘Companies shouldn’t be afraid to explore new channels and boost their business by exporting to countries with the capacity for fast economic growth.’
11. Boost sales with social media
Ed Molyneux, CEO and co-founder of online accounting system provider FreeAgent, believes that social media should be seen as a sales tool as well as a marketing aid. He explains, ‘At FreeAgent, we do this through a referral scheme – we offer a 10 per cent discount on their monthly bill to anyone who refers a new subscriber to us – and we also give the new subscriber 10 per cent off their own bill. The situation we have now is that a large number of our Twitter followers are now acting as brand ambassadors for us and are actively promoting FreeAgent to new audiences.’
12. Seek external advice
Sometimes you need to admit that you don’t have all the answers. Much as your entrepreneurial spirit may rebel against it, investing in external advice can be wise if you lack the skills within your existing workforce. Nick Green, founder of digital printing service Printed.com, reveals, ‘We use two independent advisers – one for [web] search and the other to provide data insight – and both are extremely important to the team, offering essential guidance and advice on the company’s over-arching strategy.’ The company holds weekly and monthly meetings with its advisers, which involve detailed discussion about business strategy, helping Printed.com push ahead towards recovery.
13. Maximise tax reliefs
‘Many companies do not realise what tax reliefs they might be eligible for,’ Jupp of Smith & Williamson remarks. ‘It’s not just technology companies that can benefit from research and development (R&D) tax credits – any company doing something that might be in some way innovative may qualify.’ One company that benefited from the tax relief is Aberdeen-headquartered Crescent, a safety consultancy business. Managing director Tracie Watson remarks, ‘The scheme has helped Crescent to increase our profits and demonstrate significant growth as we’ve been able to create new high-value-added products and services.’
14. Beef up your board
Many entrepreneurs will tell you that a good board can be a business’s secret weapon. One such entrepreneur is Alastair Mills, CEO of data services provider Six Degrees Group. Mills invested in experience for his board in November with the appointment of Peter Bamford, ex-Vodafone executive and now chairman of clothing retailer SuperGroup. ‘Creating the right board has been a key element of our early success,’ notes Mills. He describes the magic ingredients for a good board as ‘different skill sets and experience’ but with ‘a commonality of approach’.
15. Invite investors
Keshava Chandrashekar, founder of software testing firm Testmatic, comments, ‘In the current climate it’s great to bring in investors who can also offer their expertise, contacts and status to a growing business.’ Some companies run a mile when the word ‘investors’ is mentioned, but Chandrashekar believes that they can add a whole new dimension to a business, beyond what the founder could have imagined – and they don’t have to be hard-nosed VCs. Testmatic won funding through Venturedirector, a network of industry veterans and serial entrepreneurs who want to invest in young companies. Its investor became chairman and has helped to secure a customer that has significantly aided cash flow.
16. Love customers more
As opportunities arise to pursue new business, remember to hold on tight to your existing customers. There’s a myriad of ways to do this, but for Enterprise Rent-a-Car, systematically seeking feedback has been key. The company’s Enterprise Service Quality Index involves a monthly survey being sent to customers asking them to rate its service. Jim Burrell, senior vice president of European operations, counsels, ‘The easiest and cheapest customers to win are those you already have. So, ensure that customer service is right at the heart of your operations.’
17. Train to gain
With many businesses beginning to look forward to growth once more, IT company Quiss Technology believes that investment in staff training is a wise move. ‘Research shows that enterprises which do not train their workforce are almost three times more likely to fail than those that do,’ comments James Smith, training manager at Quiss. He adds, ‘Training is no different to any other business process; it is changing to better reflect the needs of modern business.’