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Expert small business advice from PricewaterhouseCoopers on what it will take for companies to see out the recession, and what you can do to boost your chances:
I think some of the businesses who will come out of the recession stronger are those who recognized and planned for it earlier, to be honest. So they've already done not just the easy cost cutting, but some of the structural changes in their operations to address what is undoubtedly a different market that we're now facing.
I think businesses who have been less encumbered by debt have an advantage. Because they have less shackles and less, I suppose, compliance and in some respects less masters, in terms of not having a banking relationship there. So I think some private businesses who have been maybe more cautious than others in the past have a real opportunity to grow. But again, some of that may involve extra capital and extra debt going into their businesses as well.
I think some people have seen the worst of the downturn. I think others probably have got some bad news ahead.
I think a lot of companies are struggling for cash, and are struggling to raise any funding, and to negotiate with their bankers. And there are a lot of companies out there who are at risk of breaching bank covenants. So I think a lot depends on what the banks do, and how supportive the banks will continue to be.
And actually, they've been pretty supportive in standing by the businesses they've invested in so far. But how long will they be supportive for, and what fallout will there be in the UK economy?
What we've gone through and what we're going through in terms of recession is maybe the first time for a lot of businesses. You can look back to the early '90s, but that was you 18, 19 years ago. So for a lot of businesses, even quite established businesses, what we've gone through is pretty unusual. And actually managing the cash flow, thinking about those more strategic relationships, about growing revenue, will put more of a strain on the business. I think people ought to look around, almost, how did I maintain the day to day operations? And almost quite separately put a team, put managers in place to do that. Whereas the most entrepreneurial side, the more growth side of the business, and some of those key relationships, make sure that they actually map those directly on to people within the organization as key objectives for them.
And in some respects, when you're talking about maybe new businesses, new revenue opportunities, to what extent should you actually try to reinvent those activities, not burden those new activities with some of the legacy day to day problems that businesses have. So actually keep them separate, have a separate focus and maybe even a separate culture around some of those businesses in this new trading environment that we have.
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