How to increase financial resilience during the recession, managing customer satisfaction, plus the latest inflation figures
Navigating recession: Key considerations for your business
The Office of National Statistics released official figures last week showing the UK is now officially in recession.
Gross domestic product (GDP) for the October to December 2023 quarter dropped by 0.3%. This followed a fall in the July to September 2023 quarter of 0.1%. A fall in GDP in two or more consecutive quarters constitutes a recession.
Experts will generally assess the health of an economy on a number of factors, rather than solely look at the headline GDP rates. However, the “recession” word quickly takes hold in news headlines and brings apprehension and uncertainty with it.
While it may be a time for concern, proactive measures can mitigate its impact and even present opportunities for growth. Here are some key things for businesses to look at when navigating the onset of a recession.
Financial resilience:
Assess how your business’s finances currently look. Where possible, look to strengthen cash reserves and reduce unnecessary expenses. Are there ways you could diversify your income sources so as to avoid being overly reliant on 1 or 2 major customers?
Prepare cashflow forecasts and see if you can predict where a potential downturn in income might come. Based on this, you may be able to make some contingency plans or time payments on essential expenditure so you don’t leave yourself short at the wrong time.
Analyse your customers’ behaviour:
During economic downturns, spending behaviours generally often change. Priorities are put on essential purchases while what is seen as non-essential or non-urgent is put on the back burner. How will this affect how your customers buy from you? Could you tailor your marketing strategy or the products or services you offer your customers so that they appeal to their current needs and price sensitivities?
Review your supply chain:
It’s a good time to evaluate the resilience of your supply chain. Do you have key suppliers that may struggle with a down-turn? It could be that exploring alternatives would be wise. On the other hand, if you are in a relatively strong financial position, it could be a good time to support a trusted supplier, perhaps ensuring reduced pricing or longer-term loyalty.
Strengthening your relationships with key suppliers and maintaining open communication with them can also help you to anticipate and address potential challenges.
Nurture staff morale:
Continue to invest in and nurture staff morale. Staff can also become anxious in an economic downturn, and this can easily affect morale and productivity. Consider cost-effective strategies that will help you retain talented staff. For instance, flexible work arrangements, skill development programs and performance incentives can help to keep staff incentivised.
Your staff may also have good ideas that will help your business to adapt. Spending time talking with them and giving them the authority to contribute innovative solutions can provide you with a very valuable resource.
Strategic investments:
While there are uncertainties in an economic downturn, there are usually also opportunities. It can be well worth exploring investment opportunities if you are in a position to do so.
Look for undervalued assets or potential mergers or acquisitions that can be done for a reduced price. You may be able to capitalise on the downturn to buy assets at a favourable price and position your business for long-term growth.
Government assistance:
There are many government assistance programs available, and additional ones may be added to support business continuity through a recession. Policy changes, tax relief measures, funding schemes, and loan financing assistance are all possibilities that your business could take advantage of. Stay informed about what is available, as these programs can provide much needed support.
Long-term vision and a positive attitude:
Maintain a long-term perspective, as it will help prevent you getting caught up in negative thinking that can stifle your ability to successfully adapt to change. A recession is a technical marker of the UK-wide economic landscape, but it is not necessarily an indicator for how your business can perform. Keeping a positive attitude will allow you to see the opportunities you have available to you and give you the drive to see them through.
In conclusion, navigating a recession takes good planning and adaptability. But by taking proactive steps, like those we have mentioned, your business can not only weather the economic downturn but also emerge stronger and more competitive in the long run.
We are here to support you during tough times, why not ask us about our Tough Times Action Pack that is designed to provide you with useful guidance and support.
Customer satisfaction index drops: how can you avoid the same in your business?
The Institute of Customer Service published its latest UK Customer Satisfaction Index (UKCSI) figures for January 2024. The Index has fallen by 1.7 points since last January to 76.0 (out of 100) – https://www.instituteofcustomerservice.com/research-insight/ukcsi/
Each of the 13 UKCSI sectors showed lower customer satisfaction than a year ago, with Utilities, Transport, Insurance and Service declining by more than 2 points. The highest rated organisations are Ocado (85.7), first direct (85.3) and John Lewis (85.1).
Looking at an index update like this can provide a good opportunity to reflect on the customer satisfaction of your own customers. Good customer service is characterised by several key elements that prioritise and promote positive experiences for customers.
Effective communication
Clear and concise communication that demonstrates an understanding of customers’ inquiries and addresses them promptly is key. This needs to be true wherever the interaction happens, whether through in-person interactions, phone calls, emails, or live chat support.
Empathy
Empathy is essential for demonstrating that you understand a customer’s needs, emotions and concerns. Empathetic customer service will allow your customers to feel a rapport with you that builds trust.
Responsiveness
Customers expect their needs and any issues they have to be dealt with in a timely manner. Prompt response times tell a customer that they are important to you and build loyalty.
Consistency
A high service level in one area of the business can be compromised if other areas of the business do not maintain the same standard. For instance, a high standard in pre-sales support will be undermined if after-sales support is lacking. Consistency across all touchpoints and interactions with customers is therefore important. It gives your customers confidence in your business and contributes to you winning repeat business.
Flexibility
Each customer is unique, so being able to accommodate customers’ preferences and resolve unique situations or challenges is an important part of being able to keep your customers happy. Being willing to go the extra mile, and to tailor solutions to individual customer needs, can significantly enhance satisfaction and loyalty in your customers.
Continuous improvement
Regularly collecting feedback from customers and implementing the insights that it gives you will allow you to adapt and evolve your customer service practices to meet their changing needs and preferences.
Good business systems
Having good business systems in place helps staff in their quest to provide excellent, consistent customer service. Good systems mean that staff know who is responsible for what, and where or who to get information and authorisations from when they need it.
Why not talk to us about how we can help you with improving your business systems for growth? We would be happy to help you!
Inflation stays flat
Official figures were released last week showing that inflation remains at 4% in the year to January.
Energy prices have increased due to the new energy price cap, and the price for second-hand cars also rose by 1.5%. However, food prices fell for the first time in two years by 0.4%. Discounts offered by retailers for furniture and household goods in the January sales have also exerted a downward push on inflation.
Of course, inflation staying flat does not mean that prices are not increasing. A 4% inflation rate means that prices are still going up at double the rate targeted by the Bank of England.
The Office of National Statistics (ONS) have also released figures showing that pay, excluding bonuses, grew by 6.2% in the last quarter of 2023. While this and the number of job vacancies have reduced since the summer, pay growth still exceeds inflation. The former deputy governor of the Bank of England said that he would be surprised to see the Bank lowering the base rate until this changes.
Businesses therefore continue to face increased prices for supplies and pressure to increase staff wages to meet their costs of living, while trying to balance what can be passed on to customers.
However, Chancellor Jeremy Hunt took the news as a positive, saying: “Inflation never falls in a perfect straight line, but the plan is working.”
See: https://www.bbc.co.uk/news/business-68285819
Some self-catering holiday let owners being asked to provide trade information
The Valuation Office Agency (VOA) is contacting the owners of some self-catering holiday lets. The lets in question are ones that are currently being assessed for business rates.
The VOA are looking for additional information about the income and expenditure of these properties. This will assist in calculating the rateable value of the property.
This enquiry follows an exercise undertaken by the VOA last year to contact self-catering holiday let owners. The information requested at that time enabled the VOA to decide whether the properties should be assessed for business rates or Council Tax.
The rateable values of self-catering holiday lets must be updated by the VOA every three years, and the information being requested helps them to revalue properties correctly.
Forms will be sent out between February and August. If you receive one, then it must be returned within 56 days to avoid paying a penalty.
If you receive a form and need any help with completing it, please contact us and we will be happy to help. If you are expecting a form and do not receive one, or otherwise believe that the rateable value for your holiday let is incorrect, let us know and we’ll be pleased to help.
For more information on how properties are valued, see: https://valuationoffice.blog.gov.uk/2023/02/20/how-we-value-self-catering-holiday-homes/
See: https://www.gov.uk/government/news/providing-trade-information-for-self-catering-holiday-lets