How to prepare your business for every economic outcome
We’re all for being optimistic, but it pays to be prepared. Especially when it’s your business at stake.
Let’s face it: the economic outlook for 2023 isn’t great. Our new state of spending report – where we interviewed over 3,500 senior decision makers from European companies – found that less than half of businesses admit to feeling recession-ready. So we’ve pulled together a few tips to keep your business thriving, whatever this year brings.
Spot ways to cut back
First thing’s first: take a good look at your outgoings and see where you can cut costs. If you’ve got 50 employees using one piece of software, find out if it’s essential for all of them to be paying members. Sometimes, just phoning your bill supplier and negotiating is enough to bring down your rate and make a big difference.
Think strategically when you’re making business cuts. People are often out the door first, but you’d be surprised at the mountains of other costs that should be trimmed first. Where possible, avoid letting team members go, as this will only harm business morale in the long run.
While you’re thinking about cutting back, it’s also worth considering how to make more money. One easy way to do this is to take advantage of cashback. Sign up to an annual Pleo plan and earn up to 1% cashback every time your team spends this year.
Keep an eye on cash flow
Knowing how much money is coming in and out of your business is crucial – particularly when times are tough financially.
Try diverting the money you’ve saved from cutting back into a cash reserve. The one upside of high interest rates is that you could get a better deal on your savings account, so do your research to get the most bank for your buck.
Don’t neglect your invoices, either. It might seem easier to wait longer to pay your bills each month, but this will only make your finances harder to track (and could land you in trouble with your suppliers). Pleo Invoices gives you total visibility over your invoices, with one dashboard showing a full picture of what you owe.
Don’t take on more debt than you need to
It goes without saying, you don’t want to owe more money than necessary. Some debt is needed – you might need to borrow money to grow your team or buy expensive equipment. But debts like high-interest loans and overextended customer credit lines might lead to difficulties with cash flow.
Your business’s debt ratio is often seen as a measure of your stability. The higher the ratio, the more reliant you’re seen to be on external funding, and the less likely it is for investors to lend to you. Bear in mind that a good debt ratio is roughly 1 to 1.5.
Communicate with your employees
Strong communication is even more crucial if things aren’t going to plan at work – especially for remote workforces, where catching up in the kitchen at lunch isn’t an option.
If you’re not open with your employees when the business is struggling financially, they might start making incorrect assumptions and looking for new opportunities. Currently, 74% of employees feel they are missing out on company news. This could lead to you losing valuable team members.
Think about which channels your employees pay attention to most – maybe they prefer Slack to email. Remind them of the financial benefits available to them in times of crisis – Employee Assistance Programmes and income protection insurance, for example. And open up the floor to them for any ideas or opportunities they might have to support the survival of the business. You’re all working toward the same goal, after all.
Prioritise wellbeing and employee morale
This goes hand in hand with communicating with employees. If the business is struggling, remember this will affect workers as well as leaders passing on the difficult news. They might be worried about layoffs or facing more pressure in their roles in a bid to increase revenue. Keeping your people happy means they’re more likely to help keep the company afloat.
Boosting company morale doesn’t have to mean throwing cash at pricey social events and team building activities (we even found that 21% of businesses have called off office parties). It can be as simple as adding a recognition slot during company wide meetings, where high performers are praised for their achievements, or encouraging employees to take breaks throughout the day. There are plenty of ways to prevent your team from burning out, and these little things really add up.
Keep customers in the loop
It’s not just your employees who appreciate open communication. Customers are more likely to remain loyal if they trust you, and that depends on you being transparent with them.
Our report found that 37% of businesses said customers are worried at the moment, so let them know how you’re adapting to changing situations. Whether you’re holding a networking event to gather ideas or you need to recall a line of products because they’re now too expensive to produce.
These are just a few of the ways you can keep your business in check during tough times. Whether a recession rears its head or not, keeping an eye on your finances is always a good idea. Pleo can help you do that by giving you a birds eye view of your expenses, reimbursements and invoices – all in one place. Book a demo today to see for yourself.
Expense reports? In the 21st century? No thanks!
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