How to Survive a Recession 2: Tips from a Banker Who’s Been Here Before

Owen Malton of DSW Debt Advisory – who has been through several recessions – offers some advice on how businesses can improve the odds

How to Survive a Recession 2: Tips from a Banker Who’s Been Here Before

With the threat of recession looming, there is no doubt that life is going to get tougher for us all. However while politicians argue over who is to blame, businesses need to navigate their way through the next two years.

Managing in a recession may be something new for younger business people, but after 35 years in the banking industry, I’ve lived through several. During that time I’ve witnessed first-hand many casualties in terms of business failures, but I’ve also seen businesses survive against all odds.

I believe it is important not to bury your head in the sand and wait for the worst to happen, but to plan ahead and take control. So based on my experience, here are eight ways to help your business survive a downturn:


  1. Adopt a flexible mindset – at a time of huge market change, it is important to be adaptable. Take a critical look at how you run your business and the lifestyle to which you have been accustomed. In reality, change is the only constant and it’s that adaptability which will help us trade our way out of this.


  1. Remember cash is king – build cash reserves and review your financing for the next two years at least. Manage your cash flows, with weekly and monthly cash flow forecasts, and review terms for customers and suppliers.


  1. Build projections – ones which you can fine-tune and use as a working tool. You will need these to communicate with your stakeholders, banks, investors, main creditors, suppliers and credit reference agencies. A proper model should include cash flow, profit and loss and a balance sheet – if you don’t have one, we can help.


  1. Review your expenses – cut out or reduce those which aren’t a necessity. Ask staff where they think there is waste in your business as they might know more than you.


  1. Understand where you make the most money – and where you don’t. Can you diversify your product ranges or your offering to maximise profit? Know your breakeven – at what time in the month will you have covered your costs and cash outgoings?


  1. Reassure employees – ensure they trust you as a leader and lead by example. Engender the spirit of ‘We are all in this together and will come out of it leaner and better’. If an employee doesn’t get it and their attitude can’t be changed, maybe they are not right for your business.


  1. Understand your regulatory responsibilities – if you do have to reduce costs, follow the right processes and take the right advice.


  1. Communicate with stakeholders – incentivise customers to spend and suppliers to seek cost efficiencies. Keep them engaged and make them part of your strategy. They are going to be as busy as you if not more so, so they need information that is easy to understand.  If you make their life easier, you will get a quicker decision, even if it’s not the one you want.


In any recession, there will always be casualties along the way as markets correct, but there will also be success stories. When the going gets tough, it’s as well to make the best of things and remember the words of that well-known song released in the wake of the 1990s recession: Things can only get better.