Running a small business in a recession
I was asked to talk at the 2012 Norfolk IoD Economic Conference a few weeks back. I was there to give the viewpoint of a new business – what impact has the current economic climate had on Breckland Orchard?
I set up Breckland Orchard in Spring 2009 – right in the midst of the economic dip. To that end I have known no different – I’ve no experience what it’s like to run a business in good times.
The equation for setting up a business in the current climate doesn’t look too great. You set up against the following background:
- Bank Lending – the media is full of stories of how hard it is to secure bank lending at the moment
- Crowded Marketplaces – for most markets there are already formidable competitors, more established, with deeper pockets and greater resources
- Reduced consumer spending
- Dramatic reduction in the number of grants and business advice available – eg the demise of Business Link advisors
- No credit history – starting a business with a zero credit history can have serious impacts on cash flow, as businesses try and protect themselves with tight credit control
I’m not sure that starting a new business with the odds above would appeal to the nervous or cautious.
But new businesses continue to start up, despite the current climate – and that’s exciting! It means that the recession-entrepreneurs are starting their businesses in full knowledge of what the rules of engagement are . They’re willing to take up the challenge, be courageous and just go for it! I’m probably in that camp [just not too sure how courageous I feel on a day-to-day basis!].
I’d even go as far as to say that starting a new business in a recession can be an opportunity – here’s my own personal take:
- IT DISCIPLINES YOU………
The current climate forces you to do things that you should be doing anyway. The need for a business plan becomes more critical, as does the measurement against that plan, the need to understand your spend, to evaluate return on investment. With no room for slack or error you can’t afford to ignore the business basics of setting up. Surely that can’t be a bad thing?
- IT DRIVES CREATIVITY
I actually believe that having tough economic conditions forces creativity as to how to navigate through. Start up businesses have the luxury of not having any established patterns of doing things and therefore can utilise new business methods including harnessing new IT solutions. Some of the exciting and creative solutions I see in the new business arena include the rise of coffices and the 5-9ers.
- FAST REACTION
Small businesses have always had the advantage of being closer to their customers/consumers and that speed and nimbleness can be a real advantage in a recession. An ability to innovate quickly, to react to customer feedback and to change the offering to meet the economic climate. There are lots of local food examples – the Suffolk Providore who have expanded their model to a clicks and bricks, The Chilli Company who have incorporated a Smoke and Spice offering their range. .
So setting up in a recession isn’t easy by any means…..but it does force you to think differently, act differently and maybe stand you in good stead for when the economic climate improves!
To all recession start ups out there – wishing you the very best…….