As inflation pushes up costs, firms have to keep pricing under constant review, at a time when customers are looking for ways to decrease their own spending.
So, the announcement the UK had officially tipped into recession following two consecutive quarters of economic contraction in the last six months of 2023 was more likely to be greeted with a weary shrug than outright alarm.
Graham Lamont, chief executive of Cumbrian chartered accountants, tax and business advisers Lamont Pridmore, says it is making little difference to businesses, which have been facing challenges around cash flow and interest rates for a long time.
He says high interest rates are continuing to put businesses under pressure as they pay back loans, including those who borrowed money via government schemes such as Bounce Back Loans and the Coronavirus Business Interruption Loan Scheme.
“Where it was a viable business two or three years ago, now it takes a bit of cash to service the debt if you’ve got substantial borrowings,” he said.
Barry Leahey MBE, president of Playdale Playgrounds, in Haverthwaite, agrees that businesses have already had a “rehearsal” for a recession due to the challenges of Brexit and the pandemic.
“Be it a technical recession or not, it should be up to an SME leader to take those alarm bells as an opportunity to do a few things,” he said.
This should include reassessing the business offering, improving communication with customers, reviewing cash flow and cost control.
He says business leaders also need to look at where they can make gains by embracing efficiency, including through the use of technology and AI.
Barry says Playdale has been using tools like ChatGPT and Google Gemini to produce marketing materials for lead generation, as well as to manipulate and analyse data.
“How do you diversify, what different products can you make, can you use this time for new product development? If you’re quieter then you can upskill your team and do some training.
“We are in a recession, but this is a time when maybe SMEs can adopt more AI principles to make them more robust.”
