The sky is falling, the sky is falling. The media tells me that there’s a recession coming. What should I do?
Remember the story of Chicken Little? Chicken Little went around telling everybody that the sky was falling. And everybody started to believe him.
It’s a bit like the media and talk of a recession. The more the media talk about it, the more we’ll believe. Clearly there are economic pressures, inflation, cost of living, labour shortages…so many factors affecting individuals and in particular small business. But is the Sky Falling?
It’s important to understand what should your business be doing, when it comes to possible pending recession.
Should you worry? Should you take action? Should you do anything at all? Or should you just ignore the hype? Here’s some key things that I think need to be done.
- Review your Profit Margins regularly. As supplier costs increase, you need to ensure that your pricing reflects that and you maintain your profitability rather than absorb.
- Ensure that your profitability levels are in line with general costs of living pressures. What you were making last year may not be the equivalent at today’s values.
- Do an efficiency audit in your organisation. In good times, it’s easy to hide inefficiencies. Ensure that your team are equipped with the systems and procedures to get their job done effectively.
- Understand your key numbers in your business. If you have good financial control through tight economic times, you will emerge at the other end in a position of strength.
- Eliminate unnecessary costs, in particular subscriptions to software and services. But be cafreful. You can only cut costs so far before it begins to impact your business negatively.
And lastly, turn down the noise from the media. A recession will be a self fulfilling prophecy if everyone boards themselves up and grinds to a halt.
Remember the end of Chicken Little (spoiler alert for those who were under a rock as kids)…the sky didn’t fall!!!