Winning in Hard Times

How will creative businesses cope in the economic downturn?

That’s a question that I have been asked many times recently, both in the UK and overseas.

In response, I make the following points:

Though the general economic situation is difficult, the recession will not affect all businesses equally. It is not inevitable that all businesses will suffer. So individual entrepreneurs need to look at their own specific circumstances. There are opportunities as well as threats in times of economic hardship.

Hard times affect competitors too. If your competitors are hit harder than you, then the economic climate can provide some competitive advantage. In my book T-Shirts and Suits I use the analogy of running uphill to point out that though it hurts, you can still get ahead of your rivals if it hurts them even more and you are fitter at uphill running. Some businesses will become insolvent – make sure you survive when your competitors don’t.

In a meeting in Liverpool with the UK Minister responsible for creative industries, several creative enterprises reported that the recession had prompted them to tighten up their systems and practices, especially credit control, which actually helped them to make their businesses more efficient and financially stronger. In some ways, the recession is a blessing in disguise.

The economic downturn will undoubtedly put pressure on businesses in the creative sector. This pressure will reveal weaknesses in individual firms that have so far gone undetected. Various crucial aspects of business will be tested, for example: customer relationships, fixed/flexible cost structures, credit control and cash flow, customer base (eg overseas clients), staff loyalty and commitment, and other factors.

Now, more than ever, businesses need to concentrate on the basics.

  • Focus on the products and services at which you excel and make you stand out from the crowd. Play to your strengths and make the most of your competitive advantage.
  • Keep your existing customers and build on the client relationships you have nurtured.
  • Pay close attention to cash flow planning and management – “cash is reality”.

There is no better time than now to focus on the essentials of your business strategy.

For some creative businesses, the economic downturn will be a time for winning, not losing.