Some of the most successful businesses today began in a recession. During the Credit Crunch in 2008 Airbnb opened while MTV started screening pop videos when things looked bleak in the early 1980s slump. Things weren't much better in 1997 when Netflix opened for business, while in the Great Depression of the 1920s Disney decided that the world was ready for Mickey Mouse. One thing that all of these examples have in common is they were new ideas that adapted older slightly outdated business models.

Even in a recession there are always opportunities for new ideas and for companies to change direction and move into new markets. At the same time the economy doesn't fundamentally change - it's just smaller - as people will still buy food and clothes, firms still need publicity and logistics, and the Government still puts out to tender billions of pounds worth of business.

These are some of the most obvious tried and tested methods to survive a recession: 

Thousands of businesses have gone to the wall and millions have lost their jobs – yes Covid 19 has been a disaster for the UK economy. Except for one aspect. Work and fiscal practices that may not have taken place in many work-places have been fast forwarded due to the urgent nature of the crisis. It’s all about survival.

1 Credit control must change

Many firms have not been paid by their clients for work invoiced as far back as last summer. The shut-down hasn’t helped but in many sectors 120 days credit is not unusual. When a firm goes into administration the creditors are left with four months of unpaid work as well as any work in progress. If however a supplier insists on 30 days credit then clearly if the worst happens the economic hit is much less. Ian Carrotte of ICSM Credit said tight credit control is vital as it can be the difference of a company surviving or not going under if they are hit by a bad debt. He said discount invoicing for prompt payment simply undercuts a firm’s profitability while factoring often meant a company is trading at a loss.

2 Have something in reserve

Too many businesses have virtually no reserves so when an unexpected happens such as the Covid-19 shut down they run out of cash. Putting away money into a reserve account should be standard practice said Ian Carrotte of ICSM Credit. He said it was one the lessons that many companies have learnt to their cost with the only option to borrow to bail themselves out of a hole. A rule of thumb is to put by up to six months of all business costs in an account as a cash reserve. Whenever that reserve is eaten into then, as soon as possible, replace it. Easier said than done I’m sure some will reply.

3 Review your office requirements

With many people working from home a lot of firms have realised they may not need large city centre offices. One option is to down size to a hub or smaller office and ask staff to come in for one or two days a week and work at home for the rest of the time. A hub is essentially a small office with a meeting room and enough work spaces for hot desking.

4 Consolidate factory and workshops

Some firms work from more than one site. With fewer staff retained and an examination of surplus space it is possible for many businesses to consolidate onto one site. There is a saving in communication, logistics, labour, rent, business rates, utility bills and the storage of stock. It may also be able to reduce the amount of vans, pool cars and other high value kit which may be leased.

5 Cash is king

Having several smaller clients who pay regularly every month are a safer bet than a handful of major clients whose work is irregular if lucrative. Having all your eggs in one basket is always risky especially if your one major client gets into trouble or there is another pandemic. A large number of customers who pay on 30 days or less means your business will always have cash flow – and cash is king as it gives your business flexibility and the ability to pivot in a crisis and seek a new income stream.

6 Utilise what you have

Several manufacturers ranging from packaging to printing have moved into the production of PPE during the Covid-19 crisis. Other firms with virtually no business during the shut-down have reallocated their delivery vans into delivering for other firms.

7 Pivoting your business

If the business you are in is one of low profit margins and huge competitions driving prices lower take a look at options to pivot your enterprise into. Some traditional printers have moved into packaging, agricultural businesses have upgraded buildings into warehousing, and shop-fitters into flat and home fitters completing work for estate agents and building firms. The important thing is once you see an opportunity is to do it quickly to save time and money. Over a period of years successful firms pivot from one type of business model to another.

8 Social media is not an add-on

Firms who have grasped social media when it first became a thing in the last decade have found during the lock-down they were able to continue getting their message across. For many companies the shut-down has been a wake up call as to how they communicate. One lesson of the Covid-19 crisis is that social media is not an option. Whether you are a pub, a litho printer, a marketing company or a legal firm building a following through Instagram, FaceBook, Twitter, YouTube and all the other platforms prevents you from disappearing from your customers’ awareness.

9 Zoom in for a meeting

Sending executives or sales people half-way around the world for a one hour meeting is expensive and often unnecessary. Nobody is saying that face to face meetings are dead as in the old phrase, people buy people. But often those meetings can be conducted by Zoom or other formats on the internet. So many companies have been reviewing the ROI for not just meetings, but visits to trade shows, team building weekends, seminars and conferences which have sometimes been seen as at best rewards and at worst jollies.

10 Have a plan B

Many people have said their business went off a cliff on March 23^rd. Literally no trade at all. And yet pubs were suddenly becoming take-aways, restaurants were doing home deliveries and retailers geared up to become entirely online businesses during the lock-down recording record sales. We don’t know if there will be another pandemic but something sooner or later will happen to disrupt business. Those of us who have long memories will recall the fuel delivery strike of the 90s, the three day week of the 70s and the Big Freeze of the 60s. Having a Plan B is vital just in case the worst happens.

I hope these notes are of help - as someone who has survived recessions in the 1970s, 1980s, 1990s and the 2008 Credit Crunch they have helped me - although nobody is immune from a downturn.

Best wishes for 2021 and may the vaccination programme finally get the country back in business.

Best wishes
Ian Carrotte
Proprietor of ICSM Credit
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com




ICSM Credit, the Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR

Not a member? Normally you can join for less than a tank of diesel and protect yourself from late payers but we have a special free temporary membership offer this winter. Use our free legal letters to chase unpaid invoices.

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Brexit: the EU trade deal brokered at Christmas gives a relief to business but it means “freedom” comes with a cost

Boris Johnson can rightfully claim to have kept all his promises since becoming the leader of the Conservative Party. Well up to a point. Firstly he won a general election, has ‘got Brexit done’ and negotiated a trade deal with the EU having said goodbye to as he puts it ‘our friends in Europe.’

So far so good. Putting aside the promised £350m a week for the NHS and his questionable handling of the Covid-19 crisis the signing of the trade deal has been cautiously welcomed by many in business.

Trade groups respond

Stephen Phipson, CEO at Make UK said: "Businesses must now manage their way through one of the biggest changes to trade ever seen, which takes effect in just 48 hours. There will be new customs paperwork, arrangements at the border and significant additional red tape.

"Government should move quickly to finalise data adequacy arrangements and work with both UK business and our EU partners to address a wide range of issues such as rules of origin, recognition of professional qualifications and chemical registration systems where the new arrangements are likely to be most challenging."

The Federation of Small Businesses’ Mike Cherry said: “The work of looking through the detail of the agreement to map out exactly what it means for the small firms that make-up 99% of our business community now begins. As well as going through the terms of access to each other’s markets, we are keen to see the Small Business Chapter that we have championed and encouraged both sides to include.

“What we need from here is tangible, targeted support, including £3,000 transition vouchers that small firms can spend on the training and advice required to navigate a new trading relationship with our biggest export market.” 

The CBI’s Tony Danker said: “Firms will immediately study the details, when they can, to understand the implications for their companies, customers and clients but immediate guidance from government is required across all sectors. Above all, we need urgent confirmation of grace periods to smooth the cliff edge on everything from data to rules of origin and we need to ensure we keep goods moving across borders.”

Criticisms of the deal

Sam Lowe a senior research fellow at the Centre for European Reform and former Government economic advisor said: “The new EU-UK trade and cooperation agreement will make trading goods and services between the two partners more difficult. While the trade agreement delivers duty- and quota-free trade (so long as exports meet stringent local content requirements), it does little to facilitate trade in services, and the UK did not manage to substantially reduce the need for more post-Brexit controls and bureaucracy.”

He said the government had prioritised regaining the ability to set its own laws over retaining the economic benefits of EU membership and against this metric, the negotiations can be deemed a partial success.

He added: “But it did not avoid signing up to strict conditionality. Great Britain now has the ability to diverge from EU rules in future – but doing so could lead to it losing the benefits of the trade agreement, and tariffs being reimposed, for example. Freedom, but not cost-free.”

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Lockdown the sequel: Ian Carrotte warns of mass unemployment as industry groups round on the Government for failing small businesses during the Covid-19 crisis

On January 4, 2021, at 8pm in the evening millions on people tuned in to hear the PM Boris Johnson announce a third national lockdown – this time starting almost immediately.

“I am staggered by the way the whole thing has been handled,” said ICSM Credit’s Ian Carrotte. “Once again it’s the sole traders, self-employed, so-called non-essential shops, pubs, cafes and the like who are being hit. Yes there’s some good news with the offer of more Government based loans, grants and the continuation of the furlough scheme but these measures will not stop more firms going to the wall and the economy taking a nose dive.”

He said one of the concerns was many firms had taken out loans in March 2020 which were now due for payment but had lost most of their income during the last few months.

Listen to business

The proprietor of the nation’s leading credit intelligence group said that its members were equally alarmed at the way business was being treated.

“If supermarkets and garden centres can remain open then so can almost all retailers as long as they take common sense precautions,” he said. “They sell the same products as super stores and yet are being penalised and driven into extinction. Small businesses and the self-employed are the backbone of the economy but they are the ones most affected. 2021 will see high unemployment and a recession as a result.”

Scotland is also experiencing another lockdown with the Federation of Small Businesses (FSB) north of the border echoing Ian Carrotte’s views. Andrew McRae, the FSB’s Scotland policy chair said: “This hard lockdown will cause more heartbreak for Scotland’s smaller businesses. To stop deep disappointment turning into despondency, Ministers need to mitigate the impact on independent and local businesses with easier-to-access financial help and crystal-clear advice.

“We need to see support for the economy match the scale and pace of these restrictions. Help for Scottish business can no longer be a dollar short and a day late. For a start, the glut of new support schemes announced at the end of last year need to start delivering cash to firms. So far, few of these initiatives have paid out a penny. Then Ministers need to urgently look at new ways to get money to the local firms who’ve borne the business brunt of this crisis.”

Business on ‘life support’

Ian Carrotte said that business was on ‘life support’ but needed more than the minimum help to survive. “We have to live with this virus as it will be around much longer than predicted by politicians,” he said. “Pre-schools remain open, teachers have to look after the children of key workers, medical and care workers continue to work as do everyone in logistics and transport plus workers in essential shops are at their posts so there’s no reason why many other groups of workers cannot continue to clock in.”

Rishi Sunak under fire

Ian Carrotte said he was shocked that there has been no economic assessment of the impact of the Covid-19 measures given by the Chancellor Rishi Sunak. He said there were plenty of graphs and statistics on the spread of the virus but none to show how the measures were hitting the nation socially, mentally and non-Covid medically – all of which have an effect on the country’s well-being as a whole.

"Added up these have a cost," he said. "Overall these can be worse than the effect of the virus in terms of broken relationships, broken families, broken businesses, broken communities. A recession is one thing but locking people up in their homes is something else - and we will only know the effects in years to come."

The Chancellor has announced that businesses in retail, hospitality and leisure will receive new grants to help them keep afloat along with grants worth up to £9,000 per property. Mr Sunak said he was committed to protecting jobs and supporting businesses by offering help with business rates relief and the furlough scheme which has been extended until the end of April. He added: "The Budget early in March is an excellent opportunity to take stock of the range of support we have put in place and set out the next stage of our economic response.”

However the CBI has warned that the measures may be too late for many firms, a view shared by other business groups, such as the British Chamber of Commerce (BCC) and the FSB.

BCC director general, Adam Marshall said many smaller firms would not qualify for help and called for the support to be extended to firms in more sectors who had no cash flow. FSB chair Mike Cherry also said the funds do not go far enough to match the scale of the crisis that small firms are facing and noted the measures contained no additional support for self-employed people.

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In praise of the printed catalogue – how online shopping and websites have edged out the ‘books of dreams’ that once featured Tess Daly and Holly Willoughby as models and anything from Christmas hampers to cassette players (but seed catalogues are hanging in there)

We used to get the Empire Stores catalogue complete with its range of products from tops and coats to toys and Christmas hampers. In 2020 both Argos and Ikea announced they would end the mass printing of their respective catalogues.

The motivation behind the disappearing printed catalogue is the belief that most people shop online meaning the expense of printing millions of catalogues can be ended. That’s the received wisdom as Ikea Konrad Grüss explains: “For 70 years it has been one of our most unique and iconic products, which has inspired billions of people across the world. Whilst it is time to say goodbye to the Catalogue, Ikea look to the future with excitement – as this chapter closes, another one begins.”

What he is trying to say is that fewer people use the catalogue these days compared to the numbers using the website – and not having to print several million catalogues saves a tone of money. The same is true for Argos whose print run ran into the millions with the famous plastic covered versions in the stores supplemented by palette loads of the purely paper version stationed at the entrance to the shop.

The consumer website Customer Agent explains why the likes of Kays, Gratton and Empire Stores have dropped the traditional catalogue: “The established way of  mail order shopping before the internet was with the big catalogue companies. When online shopping took over and with the proliferation of e-commerce the catalogue companies had to restructure. Great Universal Stores and Empire Stores consolidate and the catalogue brands under their names Kay & Co Ltd and Littlewood’s. The two big names Littlewoods and Kays were amalgamated under the new branding of Shop Direct. Other mail order business who restructured were the Otto Group which included catalogue brand names like Grattan Catalogue and Freemans.”

Interestingly nobody has tried to use the ‘saving the planet’ argument to justify the drop in use printing ink onto paper. Lobby groups have successfully impressed on firms that the timber comes from sustainable forests like any crop and that the majority of paper is recycled – mainly by the general public.

So it was refreshing to see DT Brown & C’s seed catalogue come through the letter box this week with all its consumer friendly pages designed in an enjoyable retro style. Catalogues like magazines can be flicked through in seconds, don’t need batteries and can be marked up with biros and pencils and eventually put into the recycling bin. More people may be using the internet to find a product but when it comes to showcasing all a firm’s products you can’t beat a catalogue for ease of use.

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Runners and Riders
Below is a collated list taken from the Government’s London Gazette of various businesses who are experiencing problems in the last few weeks. At the time of going to press one of the biggest names in the High Street - Paperchase - was about to appoint administrators. For the story visit ICSM Credit's website for this and many more stories at ICSM - Take Control Of Your Finances (icsmcredit.com)(icsmcredit.com)

Administrators Appointed
A.G. Clothing Limited  44169
Arcadia Group Brands Limited  44169
Arcadia Group Fashion Holdings Limited  44169
Arcadia Group Limited  44169
Audio Visual Network Limited  44173
Burton Trading Limited  44169
Burton/Dorothy Perkins Properties Limited  44169
BM Retail Limited  44168
Bury Football Club Company Limited  44168
Coombs (Canterbury) Limited  44168
Dave Allen Cars Limited  44166
DJP Property Limited  44169
Dony Express Limited 44176
Dorothy Perkins Trading Limited  44169
Endless Supply Limited  44166
Evans Retail Limited  44169
Evans Retail Properties Limited  44169
Extreme Adventure Limited  44169
Go Dine Limited  44172
Hayton Agriculture Limited  44169
Holiday Direction Limited  44169
Ideal Modules Limited  44169
Jascots Wine Merchants Limited  44172
Miss Selfridge Properties Limited  44169
Miss Selfridge Retail Limited  44169
Outfit Retail Limited  44169
The Oasis Graphic Company Limited  44169
Top Shop/Top Man Properties Limited  44169
Top Shop/Top Man (Germany) Limited  44169
Top Shop/Top Man (Trinity) Limited  44169
Top Shop/Top Man (Wholesale) Limited  44169
Top Shop/Top Man Limited  44169
Wallis Retail Limited  44169
Wallis Retail Properties Limited  44169
Whyte & Whyte Limited  44166
 
Administrators Meetings Para 51
Cirkularis8 Limited
Double Six Press Limited  44172
East Moors Bindery Limited  44172
The Westdale Press Limited  44172
The ABR Company Limited  44169
 
Compulsory Liquidators Appointed s 136
TMAK Construction Limited  44168
 
Creditors’ Voluntary Liquidation Deemed in Consent Meetings
A3 Creative Ltd  44182
Cambridge Print and Copy Limited  44179
CawMc Engineering Limited  44180
Data Baby Direct Marketing Limited  44179
Dawkins Haulage and Plant Hire Limited  44179
Drive-Pave Limited  44169
Design + Print Limited  44180
Excel Logistics Limited  44180
Film Locations Limited  44176
Inhygiene Limited  44169
J Dee Designs Limited  44172
Jonathan Wilson Boat Builders Limited  44172
Maxwells Restaurants Limited  44179
Mike Christian Boat Builders Limited 44172
Moonstar Digital Marketing Limited  44167
Peter Stott Media Limited  44172
Platinum Graphix Imaging Limited  44172
RS Builders South East Limited  44166
Smart Property Interiors Limited  44169
Stephen Evans Enviromental Ltd  44166
The Coach House Carriage Company Limited  44166
The Ugly Duckling - Rawtenstall Ltd  44168
Smart Ventures Limited  44180
Wyke Printers Limited  44180
 
Liquidators Appointed
4D Design and Display Limited  44167
Ace Point Travel Limited  44180
AQ Logistics (York) Limited  44165
Artwork Design (M/C) Limited  44168
Bold Advertising Services Limited  44173
Broadway Retail Leisure Limited  44168
Brockley Auto and Tyres Limited  44182
Cherry Design Solutions Limited  44182
Central Spice Ltd  44166
Centre For Health And Human Performance Limited  44167
Craft Beer & Pizza Company Limited  44167
Clameg Construction Limited  44166
Clever Connections Limited  44166
Confiserie Duchateau Limited  44166
Dakin Logistics Limited  44180
Ellem Limited  44166
Essex Auto Recovery Ltd  44166
Fabrik Building Envelopes Ltd  44167
Fab print and Promotions Limited  44173
Griffin Renovations Limited  44169
Hannaby Interiors Limited  44173
Hoptonacre Homes LLP  44166
Icon Designs Limited  44176
Laura Ashley Hotel Elstree Limited  44168
Lepus Marketing Limited  44168
Mistral Stores Limited  44168
Martinelli Wholesale Ltd  44166
Multiprint and Embroidery Limited  44173
P .M. H. Catering (Pudsey) Limited  44166
Primus Edge Limited  44167
Print Solutions York Limited  44180
P & L Services Limited  44173
Pipeace Limited  44173
RJS Transport Limited  44167
Raycross Print Factory Limited  44166
Simoney Limited  44166
Splinters Int Ltd  44167
The Eight Farmers Limited  44165
The Wedding Boutique Limited  44165
The Advertising Value Partnership Limited  44173
Trent Valley Tyres Limited  44167
Thomas Interiors Limited  44166
Tuna Fish Media Limited  44179
Urban Fit Leicester Ltd  44166
Van Marle Chauffeurs Limited  44167
 
Members Voluntary Liquidations
Cre8ive Developments (Sorto) Limited  44172
Deeson Publishing Holdings Limited  44165
Deeson Publishing Limited  44165
Evill Design Limited  44168
Fine Character Homes Limited  44168
Hilton Commercial Logistics Limited  44172
Hythe Printers Limited  44176
JJ Construction Hampshire Limited  44172
Newark Advertiser Company Limited (The)  44173          
Preferpress Limited  44168
PGIT Securities 2020 Plc  44172
Sea End Design Limited  44165
SGS Correl Rail Limited  44172
SGS Leicester Limited  44172
SGS Minerals Services UK Limited  44172
SGS Overseas Holdings Limited  44172
SGS Roplex Limited  44172
SGS Vernolab UK Limited  44172
 
Petitions to Wind Up
Abbey Mage IT Services Limited  44179
Dellaney Gibbon Design Limited  44179
London Development Group (Residential) Limited  44173
Mobile Home Sales and Lettings Limited  44166
The British Darts Organisation Enterprises Limited  44172
 
Winding Up Dismissal
Ocean Fleet Seafood Limited  44169
UK Digital Currency Association  44173
 
Winding up orders
Sage Media National Limited  44176

ICSM CREDIT

For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.

ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com