Planning for recovery

The past eighteen months have been all about going back to basics, cutting costs, keeping a tight rein on cashflow and even making some difficult decisions about staff levels. Green shoots have now appeared in what was the desolate wasteland of the economy. The shoots are not blooming yet, but businesses which want to stay ahead need to start planning for the recovery.

Utter the term ‘green shoots' to the average businessman or woman right now and it is likely to elicit a wry smile. After a gruelling period where access to cash has become increasingly harder, banks have seemingly arbitrarily reduced credit lines and customers have watched every penny, no one is in the mood for a celebration.
Telling them they have done well to survive - after all according to the Insolvency Service around one in 114 companies did not make it through the last year - will probably get a similarly muted reaction.
However, this is no time to look back. Now the dust is settling it is time to take stock of where the business is, what shape it is in and where it can go from here.
According to Malcolm Edge, head of retail at KPMG, an economic upturn can be a really dangerous time for business because over-enthusiastic and badly thought out expansion can be fatal.
"History shows that more companies fail moving out of recession than moving into it" he said. "Companies must continue to stay on their toes, keep an accurate and up-to-date picture of their finances and plan their growth carefully."
According to Edge, one of the biggest pitfalls is to suddenly go into recruitment over-drive. Many companies which cut staff early on in the downturn, decide wrongly to quickly staff up again once they are confident the economy is on the up. However, recruiting ahead of the curve of recovery is short-sighted and can undo all the previous good work in stabilising the company.
The other side of the employee story is that many good workers, who have seen out the recession in the secure confines of a company that they know well, will leave at the first signs of recovery. Indeed, a survey by www.newbusiness.co.uk found 30 per cent of employees are "planning to leave their current job when the recession ends and the job market recovers".
It is well worth devoting some time to initiatives that stop employees jumping ship. Simple steps such as keeping them in the loop by sharing a summary of the business plans and budgets can go a long way in securing future loyalty.
With a bit of imagination there is a lot that can be done to keep staff on board. Software house Madgex, for example, has a really simple but effective way of motivating staff. On company away days, a tried and tested way of maintaining the buzz, it quizzes them on their ‘perfect working day'. Many of their suggestions, such as providing free cakes on Friday, fresh flowers in the boardroom and the appointment of a green team to make the company more environmentally friendly, have been taken on board.
It could also be a valuable exercise for both sides to invite suggestions as to how the company manages the recovery. This could cover anything from agreeing sales targets, to the design of new products or services, to ideas for a new marketing strategy.
Marketing plans should in fact be a vital part of the post recession priorities. Marketing budgets are always first for the chop when times get tough, but the brave businesses who spends a little money coming out of the downturn can easily steal market share from less fleet-footed competitors.
The good news is there is a large amount of support available for those looking to improve their marketing skills without investing a fortune. A lot of advice can be downloaded from the internet for free and banks such as Barclays, for example, offer marketing seminars. The many websites aimed at small businesses offer some useful ideas and case studies too. This might even be the time to turn to the internet and set up that e-commerce arm as a way of boosting sales
One of the most difficult aspects to planning for the future is the sheer depth and severity of the recession means the old rules now no longer apply. It's not a question of simply reverting back to the old, more buoyant, days and resuming plan A. There are no obvious pointers as to the way forward either when even the experts are divided on what will happen next. On the one hand some insist that we will slowly emerge from recession, while others say consumer confidence may stall again leading to the ominous-sounding double dip recession.
The best solution is to go back to business basics. That means digging out that business plan and starting again with a detailed analysis of competitors, the viability of customers and the various costs of doing business such as raw materials and labour costs. It also means re-evaluating the availability of credit. Once this has been done, in order for the recovery plan to succeed, a company must constantly keep an eye on all the figures to maintain an up-to-date and accurate picture of its position in order to respond quickly to changes in demand.
And, if that all seems daunting after a tough couple of years, there is more to come. Some experts advise that the only prudent way forward is to actually start planning for the next recession now. Turnaround specialist and author Anthony Holmes says that with the knowledge that economic turbulence is cyclical, firms would do well to use the hard-learned lessons from this recession in preparation for the next.
His advice is for businesses to consider five things that they wish they had done prior to the recession which would have made their lives easier; five things they have learned through managing a path through the downturn; and five things they have learned not to do through this period.
These important pointers should be noted down and referred to again when the economy takes its next, inevitable slide.
In times of change, the riskiest strategy is to do nothing at all and just see where the recovery progresses. The challenge for any company is to keep an eye on the current risks, while also planning for the future. That means taking stock and planning for action now.