Pat  0:00 

Hi Pat, the podcast editor here! Unfortunately, the world seems to be on a downward spiral since the infamous year 2020. With a recession seeming evermore possible, Dan and Lloyd are here to impart some business knowledge and set your mind at ease.

Dan  0:15 

For really good businesses and businesses that do the right thing in this period a recession could be a really good thing. A lot of businesses go out of business because it’s really challenging and therefore the best businesses survive and end up thriving more so than they would have done without a recession or an economic downturn.

Pat  0:33 

And Lloyd reveals his best business tip for making your company recession-proof.

Dan  0:38 

One thing we’re doing is diversifying markets. Even if you know the whole world had an economic downturn, some countries will fare better than others and the more that your customers are spread, the more you have that little kind of buffer of protection

Pat  0:54 

It’s scary times for everyone and we’re all in this together. Let’s remember these tips next time you’re worried about the future, and you’ll be okay. Now, before we dive in, we’d like to take a second to thank our sponsors, Adobe Express, which allows you to quickly and easily create outstanding social graphics, logos, flyers, banners, and more for web and mobile. Click the link in the description to try Adobe Express today. Alright, let’s get stuck in this episode 113 of the Business Anchors Podcast.

Dan  1:38 

Lloyd, I’m concerned for our business, energy prices are rising. The Bank of England has warned the UK will fall into recession as it raised interest rates by the most in 27 years. What on earth can we do to ensure we survive the recession?

Lloyd  1:50

I’m concerned you were reading that Dan, it sounds so naturally normal like you might have read that question.

Dan  1:55 

I might have read that question.

Lloyd  1:56 

Okay well, I’m going to talk about eight different things that we can do and every business can do to try and survive a recession.

Dan  2:08 

I think this is relevant right now, isn’t it?

Dan  2:10 

Unfortunately, yes. Yeah. I think businesses are likely to need this stuff in the next few months but, to frame this positively as we spoke about reframing last week. For really good businesses and businesses that do the right thing in this period, the recession could be a really good thing. The unfortunate thing is a lot of businesses go out of business because it’s challenging. Therefore the best businesses survive and end up thriving more so than they would have done without a recession or an economic downturn. I guess, I’m kind of thinking, I have every confidence in our own business and I’m thinking, I know we’re doing the right things, I know we’re positioning ourselves to do well throughout the next couple of years. I’m thinking, do this stuff, treat it as a positive of oh, this is an opportunity. We never hope that other businesses will go out of business, except our competitors. But yeah, the reality is, it can be a positive if you do the right thing.

Dan  3:14 

I’ve seen lots of people talking about it being the biggest opportunity in a recession to thrive.

Lloyd  3:20 

yeah, there are the stats on like more millionaires and billionaires, amazing recession, I don’t necessarily think that’s a great thing. The reality is there are opportunities to grow and there are lots of opportunities to grow faster than ever, because there’s less competition, you know, different types of opportunities. When you are challenged, you find solutions for things without those challenges. Maybe you won’t, you wouldn’t have changed things that make your business thrive in the future.

Dan  3:51 

You can become complacent, can’t you? Everything’s going well, some businesses were during COVID smashed because everyone went online, but then they didn’t take care of the rest of their business. So yeah, exactly. So are you concerned at all for our business with this recession looming? Are you concerned?

Lloyd  4:11 

No, no, but that is so not at all but that doesn’t mean, we’re not taking action and I’m not taking action. I guess I’m not concerned because we are taking action already and I think the first time, you know one of our daily meetings I mentioned, it’s probably about six months ago to our team. I just said just so you know, I think in the next six months to a year, there’s going to be a recession. It’s going to be challenging, but I sort of said we’re aware of this, we’re already doing things to make sure we’re set up well for that. So you know, you don’t need to worry about that kind of thing.

Dan  4:47 

What are we doing? You mentioned those eight things. What are we doing that will help our list?

Lloyd  4:52 

Do you want to know the eight things then?

Dan  4:54 

Yes, I do want to know the eight things.

Lloyd  4:55 

To be honest, this will be a good test. I don’t know if we’re doing all eight? but yeah, we’ll see, I think we probably are. So one thing we’re doing is diversifying markets. So if all of your customers are in the UK, and the UK goes into recession, all of your customers, or most of your customers will have less money. Less likely to buy your products or services. If you have 50% of your customers in the UK, and 50% in the Netherlands, and the UK goes into a session, but the Netherlands isn’t a hit as badly. Half your businesses have that protection around it of ‘oh a strong economy is supporting this’. So obviously, everyone’s business is different. This will be easier or harder depending on the type of business you have. But you know, for us, most people would think of a creative agency out of a town called Manston. Never heard of that have you? That’s where we are. In the southeast of the UK. Most people would think well, I guess you worked with some people in London and your local area. Wrong. Okay?

Dan  6:14 

Yeah. Go on Lloyd. Tell them, tell them…

Dan  6:16 

The UK? So this is currently the UK, Ireland, USA, France, Israel, and Australia.

Dan  6:26 

That is pretty Mental.

Dan  6:27 

That’s at the moment, that’s the USA, did I say the USA?

Dan  6:31 

Yeah.

Dan  6:31 

Anyway, just to show you we are a business that isn’t in a big city, we’re not in London, Manchester, Birmingham, a city that you’ve heard of, we are in a remote location and we are working globally, it is much more possible than you think. The reason I think it’s, it protects you as I said, say we’ve got clients in those six or seven countries I mentioned, even if you know the whole world had an economic downturn, some countries will fare better than others. The more that your customers are spread, the more you have that little kind of buffer of protection. It’s like, ‘oh only 60% of my customers are struggling’ or ‘only 30%’ or even if you’re saying 90% of them are struggling, but you’ve got this 10% of people who are in Australia and their economy is fine. You know, you can rely on that.

Dan  7:21 

Can I share how we’ve done it? Just briefly?

Lloyd  7:24 

Yeah

Dan  7:24

Just the point. Yeah, social media.

Lloyd  7:28 

Social media has no boundaries.

Dan  7:31 

Exactly but like, if you think about it, all of these people in Australia, the USA, Israel, France, all of these people have heard of us through social media, which is global. It’s such a powerful tool to reach people all around the world and if you’re not using it, then you’re missing a trick.

Dan  7:51 

There’s a massive conference next week in Las Vegas, around insurance. There’s going to be a video playing that was shot in Minster, which is a small village down the road from where we are now. That’s crazy, isn’t it? and I just think, even if you’re not B2B and you’re selling products like there are ways that you can sell internationally, it could be you partner with a distributor in different countries, or it could be that you sell direct, but I would just say, it’d be great a great thing to look into now it’s not too late. Like I said, if you have no one in different markets now, but you can get 5% by next year, or you can get 30%, it’s always gonna protect you and de-risk the situation.

Dan  8:35 

I think it’s funny that we’re making videos for a company in Australia.

Lloyd  8:39 

Yeah, very annoying with the Zoom calls and different times but yeah, It works.

Dan  8:44 

Yeah, cool. Sorry. So carry on. Like, that’s one thing diversifying markets.

Lloyd  8:48 

I’m going to use that word again, diversify. Diversifying revenue streams. So in a lot of businesses, they have different ways of making money. So some businesses make money by doing this exact thing and there’s nothing else but a lot of businesses, there are several ways. So we provide several different services to our clients and there are probably people that provide several different products. Certain revenue streams are going to be more vulnerable in a recession. So things that people will see as luxuries or premium items. If people are being more careful with their wallets. Likely, they might not buy them, people are going to be going from you know, Tesco… was the good one that I never buy?

Dan  9:36 

Finest.

Lloyd  9:37 

Yeah. Dan has it at his house.

Dan  9:40 

No, I shop in Waitrose mate.

Lloyd  9:41 

So, people, people are gonna go from Tesco finest to standard Tesco. They’re gonna go from the standard Tesco if they’re on that now to the extra value. So things that are premium might not sell as well. There are lots of examples like that but again for our business so before the pandemic, Dan, do you want to guess how much of our turnover as a percentage was in-person training or event speaking around the world?

Dan  10:07 

Oh god, this is going to be interesting in a percentage.

Lloyd  10:09 

In the year before the first lockdown?

Dan  10:14 

25%

Lloyd  10:15 

Not bad. So 18% came from those things that we immediately got locked down, and we couldn’t get revenue from those anymore. Interesting 18% of our revenue going? Yes, but we had 82? Yeah, that was correct data myself 82% of our revenue, that was still things we could deliver for our customers. So that meant it was okay. And we could focus on those things. If we were a training company, we would just focus on that, or if we just did public speaking events around the world, and by we, I mean you because I was relying on you for that. You know, that would be 100% of our revenue gone overnight. So if there are any ways that you can diversify your income streams, from different products, and different services, that will help protect you, but also looking into and thinking about which of my revenue streams might be vulnerable to a recession? So obviously, things we had to travel were vulnerable and in a pandemic, what could be vulnerable? And I guess, placing less focus on those in your marketing, and more focus on things where you think, no matter what happens with the economy, people are still gonna need this thing that I provide. Can you put more focus on that for the next year or so?

Dan  11:35 

I guess my only sort of devil’s advocate thought on that is with us, we charge a premium investment fee because we offer a premium service and we’ve got data to back up the results we achieve because there’s a reason for a recession looming, we’re not suddenly saying that we’re going to cut that and do offers and like, cut the premium thing we’re offering. So I just wouldn’t want everyone listening to think, ‘Oh, I charge a premium for this thing offer’ but because there’s a recession, I’m going to not do my premium. I don’t know, maybe I’m wrong.

Lloyd  12:09 

But I’m not saying to cut prices. It depends on who is buying those things as well. I wouldn’t mark it premium stuff to businesses or industries that are going to be cutting their marketing budgets, because that doesn’t make any sense. But, we will continue to market to those industries that we know while you’re out there marketing budgets, some will invest in marketing.

Dan  12:33 

Yeah. Okay. That makes sense.

Lloyd  12:34 

Yeah? I’m not saying cut your prices, you’re saying, just look at what could be vulnerable, and focus on the things that are going to provide customers and revenue throughout a recession.

Dan  12:47 

There’s an example here, there’s a guy called James Sinclair who has got multiple businesses, and he’s got a YouTube channel. I love watching his content. I think he’s good at diversifying his revenue streams when you look at behind-the-scenes series. Like when the pandemic happened, he started all these new businesses. Yeah, I think just looking at what he’s done, he’s good at coming up with new kinds of revenue streams. So check him out.

Lloyd  13:13 

Yeah, definitely. Another thing that he mentioned in a video recently, was the third thing: invest in marketing. So, a lot of businesses, if they think budgets are going to be tighter, recessions looming, they cut their marketing budget which initially seems to make sense, because okay, well, the business can still run, we’re just cutting out that cost. The more you look into it, the more it’s ridiculous.

Dan  13:43 

It’s funny, you say that someone that runs a marketing agency.

Lloyd  13:48 

You don’t need to invest in us. This is something we’re living by there. So you don’t want to see what we’re doing. But there are a lot of people going to cost-saving mode, which to an extent makes sense. So you might be able to cut 10% of your costs. In theory, you can cut 10% of your costs, I doubt very much you could cut more than that without making your business much worse than it currently is but that only gives you a 10% buffer. So that means the best you can do is survive if you lose 10% of your customers or your income. So what if you lose 20% of your income? What are you going to do then you can’t cut any more costs, whereas investing in marketing, you can get more revenue, and more customers and you can increase that, you know, that buffer could be 10% or 90% or 100%? You know, there’s an endless opportunity for more revenue and new customers you can find whereas there’s only a finite amount of cost saving that you can do.

Lloyd  14:52 

I feel like this is what we did when the pandemic hit. Yep, we went on several walks to discuss what We on earth were going to do when it was all up in the air. Our end agreement from that was, right, we’re gonna go all in and work our asses off to be better at marketing than we’ve ever been, when we put loads of resources and time and energy into focusing on our marketing it made us grow the most we’ve ever grown in any period of running our business by doing that.

Dan  15:23 

We built our team through the pandemic, rather than not investing in improving our people and our team and our services. That meant, now we’ve come out the other side, our business is in such better shape. In such a better position to make money.

Dan  15:39 

it’s a struggle though, I can understand why business owners will be looking at marketing as a cost and thinking let’s cut it, I guess like if they invest more then…

Dan  15:49 

You should only think of marketing as a cost if your marketing isn’t working. If you spend, it depends on the size of your business. Let’s just say 10,000. If you spend 10,000 pounds a month on marketing, and you’re not getting more than 10,000 back, then yeah, fine cut what you’re doing there. Yeah, but spend 10,000 on something that will work. If you’re spending money on marketing, and it’s bringing in revenue, then if you’re cutting it, that’s just a terrible thing to do.

Dan  16:19 

Yeah, that’s a good point.

Lloyd  16:22 

Thank you. Do you want another good point? Yeah, go on, give us another one. So this is a bit different. So this is more about not necessarily making sure that our business thrives through a recession, but looking after our people. So the next point is focusing on being cautious and responsible. So we have a responsibility, we’ve given people jobs and we want to do our best to support them through a recession, it’s gonna be harder for everyone, it’s gonna be hard for us as business owners, it’s going to be harder for our employees in and outside of work. So we need to do our best to support them. I guess what I think we do here and I would hope others do is be just slightly more cautious. So say our business made a 10,000-pound profit this year. You know, if the business is booming and everything we might be like, go on let’s take that 10,000 down. Yeah, champagne all around. If you’re looking at the future and it’s not looking as good? It’s like, Hang on, 10,000 pounds could pay someone’s wages in three months, when we haven’t got as many customers as we would like, let’s pause on the champagne in order…

Dan  17:45 

Get prosecco?

Lloyd  17:46 

Let’s take 1000 pounds out. Let’s leave 9000 pounds there for a rainy day. The likelihood is if you’re making sensible decisions like this, and investing in your team and your people, that in reality, you’ll be able to get that 9000 pounds out another day, it will still be there because you’re making the right decisions. I suppose counteracting my last thing of like, don’t cut costs, but still be cautious and make sensible decisions, knowing that things may be tougher over the next few months. So hold on the champers in the Ferraris

Dan  18:18 

We’ve spoken about this before. There are peaks and troughs throughout the whole year. It’s never a flat line of revenue. So you need to be saving for those rainy days not doing what we used to do, which is when we got a new customer on board we would just book holidays and stuff and celebrate.

Lloyd  18:38 

I realized my next point is the same one.

Dan  18:40 

Oh, go on.

Lloyd  18:41 

Just differently framing, hmm, the last episode. Yeah. Make sure you have a cash buffer for our time. So many businesses fail because of cash flow, even if they’re making a profit. So a lot of people don’t get their head around this, because well if you’re making money, why would you not have the cash? There are always things you have to pay for and money that comes in at different times. Why are you smirking?

Dan  19:06 

I was just gonna say revenues vanity, profit, sanity, cash is king.

Lloyd  19:13 

Oh, is that a saying? That’s what it was. Pretty cool.

Dan  19:18 

I spent the whole time not listening to what you were saying. Just trying to remember what that was.

Lloyd  19:21 

An example of this. Say we make 20,000-pound profits on a big project we deliver, brilliant. If that customer doesn’t pay or pays late on their final invoice and we’re still waiting to receive that. Yes, we’ve made a 20,000-pound profit but until that’s in the account, and we’ve not got it so if you need 20,000 pounds, pay your staff wages that month, the business has failed because your clients paid late. So having as big a cash buffer and sort of sorting out anything in advance of like any credit facilities for your business with a bank to make sure you’re prepared for that,

Dan  20:04 

don’t do what we did at the start, which was invoicing everything on the last day of the month, even if it was delivered on the first of the month, and then giving 30-day payment terms, and then not chasing up unpaid invoices, don’t do that.

Lloyd  20:18 

That means people pay you after 4 months. Don’t do that, because you’re in a crisis and that leads us very much into my next point, which is a really exciting one guys. Tighten up on Credit Control. So what I mean by that is, basically start now getting better at making sure you’re getting paid on time and cash is coming into the business. So a few things to do here, that I’d recommend that I’ve already seen having a massive effect on us, so I’ve only been doing this for a month and kind of improved it. Chace payment, the day it becomes overdue, so don’t think ‘Oh, I haven’t paid’ I might get in touch with them next week. So now it’s like, oh, our payment was due yesterday, what’s happened? and now our clients know how they’re really on it with chasing payments, sending reminders about payments up front to kind of de-risk it being late. So a week before payments is due just a reminder payments are due in a week. The reality is businesses will go out of business in this recession, and just because their customers haven’t paid on time that will happen. I know this is less of an issue for businesses that are selling products directly to consumers because they usually pay upfront for B2B businesses. You know the norm is to pay your invoice after you’ve received the service or whatever. This will kill businesses because your customers are under more pressure like, ‘Oh, we haven’t got the cash yet and it has a knock-on effect and the businesses will fail. So yes, get ahead of that. Credit control. Number seven. Yeah. Talk to other business owners!

Dan  22:02 

Okay, what do you mean by that?

Lloyd  22:03 

In my experience, a lot of helpful things, when times are changing, come from conversations with other businesses that I didn’t know existed. So, for example, there are quite often grants, there was one grant we got previously a couple of years ago so the government gave us money to invest. It’s because one of our clients went to meet them at an event and they said ‘Oh, we’ve just got 3000 pounds through this thing’. You just fill out this form online, and I did it, and we did and that’s only from that. So all these other business owners are having similar issues to you in a recession. They may have already found solutions that you can learn from. So I do think networking with other business owners or business leaders is more important than ever in a recession when you’re quickly looking for solutions or help or support. They are as well and they may have already found things that will be useful to you.

Dan  23:02 

So you’re suggesting going to a weekly networking breakfast meeting?

Lloyd  23:05 

No, not necessarily that, not Lloyd? Because we’ve experienced those in the early days, it just leads to obesity and no income. Yeah, because you just have a fry-up episode every morning.

Dan  23:16 

Episode one of our podcasts. I think we spoke about this. Yes. Yeah. Cool. That’s a good one. Networking?

Lloyd  23:21 

Yeah, other people or businesses may have found ways to save money, ideas on how to increase revenue streams, you know, all the stuff I’m talking about. So do that. Nice. Final one.

Dan  23:31 

Give us the final point.

Lloyd  23:32 

Final point, guys.

Dan  23:33 

This is useful stuff.

Lloyd  23:35 

No need to sound surprised. Most important, If you are a business leader, or business owner or even if you’re a manager in a department or you have any responsibilities, business distress by realizing you can only control what you can control. So in all of the news and stuff at the moment, it’s all about

Dan  24:00 

doom and gloom,

Lloyd  24:01 

doom and gloom. Oh, bills are going to be so high, and businesses are going to fail. Oh, it’s all crap. Oh, oh, there’s another crap Prime Minister, if that’s your opinion. The reality is very few of us can do anything about that about what they’re talking about.

Dan  24:19 

So you’re telling people not to vote?

Lloyd  24:23 

I’m not getting into politics at all Dan.

Dan  24:26 

I’m joking, joking! go on, carry on?

Lloyd  24:26 

No, I’m just saying. If your mental focus, as a business leader, or business owner is going into worrying about these things that you can’t control, you are going to perform much better and be able to focus much less on the things that you have control of. So I would say your business is more likely to go out of business in the recession. If you’re just like ‘Oh my God, all this crap happening’ you’re just worrying, what is the point? you can do absolutely nothing about that unless you’re in a very prominent position. I’m talking about most people whereas ‘Oh, we got these two customers who have paid late or haven’t paid us, put your effort into having conversations with them, put your effort into trying to diversify your income, put your effort into other good stuff, ‘Lloyd said. I just think this is so important. It’s so easy to fall into that thing of just worrying and all your focus on that. So, you know, you said at the start of this podcast, are you worried about our business? And I said, No. The reality is, if something crazy happens, and there’s nothing we can do, like say that the whole world, the Apocalypse, and like, no one’s investing in marketing, because they’re trying to survive. I know, there’s nothing I can do about it. So I’m not going to worry about that.

Dan  25:45 

What if it’s really good marketing though?

Lloyd  25:46 

I’m not gonna worry about that, you know, and all of us, our team will understand if they lose their jobs if ‘oh, yeah, you know zombies are running around, and everyone’s burning down each other’s houses’ they’re not going to be like Lloyd, you’re out of order. You’ll be like, nothing. So there’s no point in worrying about that and if you’re dealing with the things that you can control, then there’s nothing to worry about

Dan  26:10 

Something I’ve done that’s helped with that in the last year, I’ve stopped listening to the news and it’s helped me.

Lloyd  26:16 

That was going to be something I mentioned. I do think, I think it’s like, occasionally, uh, I think listening to the news. Give yourself a bit of perspective on what’s happening in the world. I’ve stopped, I used to listen to it every day, on the way to work on the way home and I realized, I’m just hearing all this negative stuff over and over again, and it doesn’t help. So now, like once a week, I might listen to be able to be a bit informed about what might be happening in the world. But yeah, I think that’s useful. Yeah. Well Dan, on that note I’ve given you my eight things. Are there any? Do you have any kind of useful resources or anywhere or tools or anything people could use to help them recession-proof?

Dan  27:04 

Well, as you asked Lloyd, Adobe Express has some amazing tools that you can use to design amazing assets for your social content. Erm no, Adobe expresses genuinely good and the pod sponsors. But there are lots of resources. So few things that we create first of all. The Friday club is our weekly newsletter, where we share all of our best lessons and insights and tools and reports and studies that we learn from, we share in the weekly newsletter, just Google the Friday club or it’s on my LinkedIn. Listening to this podcast is another one that you should do because we share lots of useful stuff. There’s another one in terms of marketing, Matt Nevarez, Geek Out Newsletter if you want to keep up to date with all the latest changes in society so that you can use social media effectively to help promote those new revenue streams that Lloyd spoke about that you should be creating, then definitely sign up to Matt Nevarez email list because

Dan  27:56 

I would say someone we mentioned earlier, James Sinclair Follow him and subscribe to his YouTube channel. He’s a clever guy that owns a lot of different businesses and is a nice guy. And he talks a lot about the current state of business and what he’s doing within his businesses and gives lots of really good advice.

Dan  28:18 

He texted me the other day, Yeah, he’s got a text saying I love what you’re doing on Tiktok.

Lloyd  28:24 

Oh, now we’re on our podcast. I love what you’re doing… Everything in the world

Dan  28:30 

I went up and met him a few years ago. He’s a nice guy. So yeah, he’s got loads of great content.

Lloyd  28:37 

A note that I had talking about tools to help relates to us don’t listen to the news thing, I made a note, download audible, and listen to books that will help you rather than listening to news that will make you feel negative because in a year, say you’ve listened to 12 books, some could be for enjoyment, just to de-stress, but some could be learning how to do better in your business in a year. Think of the position you’ll be in.

Dan  29:03 

Another thing I did a few years ago now, is turn off all, almost all notifications on my phone.

Lloyd  29:07 

Me too.

Dan  29:09 

A lot of it used to be like notifications from social news and things like that that were negative and now let’s look at it.

Lloyd  29:14 

I realized I forgot recently that that’s not normal. Because yes, for so long now I haven’t only had notifications from humans. So yeah, I have an integration with WhatsApp. That’s a human trying to get in touch with me and obviously if the phone rings, but no other apps like do this stuff and read this news. I just forgot recently that that’s not

Dan  29:37 

It’s a game changer. Nice, Good tips Lloyd good episode!

Lloyd  29:46 

Thanks.

Dan  29:47 

I think this will be useful to the listeners and if you’ve enjoyed this or if you think anyone will gain value from this, please do share business anchors with your friends, or your family and post about it on social we’d appreciate it wouldn’t we Lloyd?

Lloyd  29:59 

Anyone that you think this I mean, this is very relevant or we’ve been talking about anyone that you think this could help, please share this episode. Any other input that you have on how we can recession-proof our businesses, please do let me know because I’m, I’m doing that as well. So, yeah, that’d be great.

Dan  30:17 

Where will we see them next week, Lloyd?

Lloyd  30:18 

I reckon we’ll see them in their ears next week.

Hopefully you’ve learnt something from these recession proof business tips! If you have any more questions, then why not start a conversation with us here at Knowlton.