Six Things You Must Do in 2023 to Navigate the Economic Downturn

Sustain investment, strip inefficiencies, and mount a drive to increase market share. This will provide you with the greatest chance of long-term success when the downturn passes.

At last, it feels like green shoots are on the horizon. After months of doom and gloom about what the future holds for businesses across the country, confidence appears to be rapidly increasing.

According to a major report by Accenture / S&P Global UK, expectations about future activity among UK businesses picked up sharply in February 2023, having plummeted to a record low in October 2022.

In fact, at +43%, the net balance of manufacturing and service sector businesses expecting activity to increase over the next 12 months was the strongest recorded in a year, and marked a significant uptick from the +18% registered in October 2022. UK companies are now more confident than almost all of their European peers, with levels of optimism nearly double the average seen in the eurozone (+23%).

Yet there is one thing this report doesn’t address and which is important to underline. And it’s this: that a period of economic turmoil can actually present opportunities for the businesses navigating their way through it.

At Champions UK Plc, we specialise in creating strategies that enable our clients to grow in all environments. So, what are the key hurdles businesses need to navigate across the rest of this year?

In the premise of a downturn, people look to spend less, so are more likely to switch to cheaper alternatives or simply just buy less. As a result, businesses may face a decrease in sales during such periods.

A natural reaction to this reduction in activity is to reduce the costs, such as cutting down on marketing spend. Whilst businesses should be strategic with their budgets, it’s important to minimise waste not cost – marketing is not waste, its a business necessity, and so should be efficiently invested in to support a business through periods of downturn and advertise the business as an enticing proposition for consumers and clients.

The second problem you are likely to face is a skill shortage. There is already a skill shortage blatantly evident within SMEs. It’s vital then to create an effective talent retention strategy, to ensure your current struggles are not exacerbated. Maintaining or increasing your quality of output will help serve as a point of differentiation, and help to target that shifting consumer demand during periods of economic uncertainty.

I’d advise you do six things between now and the end of the year.

1. Keep the right mindset

This may seem like a small thing, but it's actually vitally important. You need to maintain a positive attitude and have a clear plan. You have the ability to control your own destiny. So focus on what you can do rather than what you can't. Set your goals and work towards them one step at a time. Get organised and make a budget.

2. Remain agile and resilient to market changes

Agility should become a top priority for high-growth businesses as they cope with the ramifications of the recession. These new policies will inevitably bring market and pricing changes, where rapid responses from businesses will be crucial to guard slimmer margins. Both long and short-term business plans should incorporate some element of flexibility, working with finance, inventory, and supply chain data to stress test “what-if” scenarios. Then ask questions such as how cash flow will be affected, what evasive manoeuvres can be taken, and how risk can be lowered with preventative measures.

3. Use cloud technology and automation to your advantage

Achieving a high level of data visibility is only possible in the cloud, essential for running critical aspects of a business, including accurate financial reporting, remote management, and speeding up manual processes. Cloud users are more able to automate key processes and avoid manual work (85% vs 37% of non-users). With a laser focus on cost-cutting, automation is a great way for your business to do more with less, while making employees’ roles more fulfilling.

4. The evolution of supply chain

Developing an agile, robust supply chain that can survive disruption and shortages is a cornerstone of business resilience. When considering their supply chain, businesses have been forced to react quickly to continual product shortages, delivery strikes, and port delays, which show no signs of slowing down in this recession. Moving from just-in-time towards a just-in-case or ‘more stock, fewer deliveries’ model mitigates the risk of unpredictable shortages or shipping delays yet requires businesses to balance out associated overheads of storage, transportation, and management. This helps protect profitability in a forever-changing supply chain ecosystem.

5. Pick up crucial new skills

Technology is just one part of the puzzle. To remain agile and be able to react quickly to new challenges, one of the most important factors is the willingness of leaders to pick up new skills as they expand. Business owners and management teams should make time for training despite the new economic pressures, learning from peers, experts, and mentors to further grow and enhance their business.

6. Do three things

Sustain investment, strip inefficiencies, and mount a drive to increase market share. Focusing on these three areas, underpinned by an increase in overall business efficiency, will provide businesses with the greatest possibility of long-term success when the recession eventually passes.

By placing a greater focus on business efficiency, as opposed to simply cutting costs as an immediate reaction to economic downturn, businesses can ensure their survival and long-term viability – businesses that demonstrate an ability to be agile and efficient are better equipped to adapt to changing and volatile markets, maintaining their competitiveness, conserving their resources, and solidifying their future growth.