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Strategies for SMEs affected by recession



The current harsh economic climate has had a serious impact on businesses of all sizes, with many companies being forced out of business. Throughout this recession, the media have largely focused on larger businesses while thousands of small and medium enterprises, often known as SMEs, have ceased trading but received little attention. As a result, the public see an SME going bust as just another statistic, the reality is that the business was the sole livelihood for the people related to it. For the SMEs, which have survived the recession so far, the hard times are far from over; there are likely to be at least another few years of hardship before any improvement, so businesses must battle to stay afloat.

Currently, there is one major trend that is affecting almost every retail industry, i.e. the increasing trend of shopping online. Studies have shown that over the last few years the amount of money spent through online stores has increased dramatically; the experts predict this trend to continue. Therefore having an online presence is essential for the survival of businesses particularly SMEs.

All businesses, regardless of size or niche, must adapt to the ever changing trends in the marketplace and employ various strategies in order to stay ahead of the competition. Companies must evaluate their products and establish their strengths and unique selling points – the reasons why they stand out from their competitors – and promote these to the potential customers.

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There is hardly any industry that has escaped the wrath of recession, therefore it is a good business practice to analyse why competitors went out of business to help prevent your own company from making the same mistake. All too often many companies fail to learn from each other’s mistakes and end up going down the same path. Finding new customers is imperative in order for the SMEs to survive in these difficult times of recession. Most SMEs have been compelled to be more flexible than ever and agree are willing to do business on low margins just to keep their customers loyal.  Any SMEs not willing to be flexible will lose out on their potential customers.

Whilst maximising income is important to the survival of SMEs, the importance of reducing costs is often forgotten. Many smaller businesses have been forced to make difficult decisions regarding staffing costs, including redundancies, whereas regular reviews of all monthly costs could have achieved the same results. Reducing energy costs, for example, has been very popular among larger businesses, with the additional bonus of helping the environment as well as improving the turnover. Many SMEs have also made the decision to reduce their trading hours to save on staffing and energy costs.

The recession has turned the marketplace into a buyer’s paradise and all companies must use every technique possible to increase their turnover and protect the future of their organisation. By acting early and taking small steps, this goal can be achieved with little strain on the daily activities of the company, whereas many SMEs have waited too long and been forced to take drastic and crippling measures in a desperate attempt to stay in business.



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