Every small business owner in the world will know that the current recession is one of the most dire that the world has ever seen. In fact, the last time there was a recession this bad, world war two was what got us out of it, and I’m pretty sure no-one is hoping for another one of them!
I believe that there have been 3 main factors that caused this economic state, and one potential solution for small businesses, this is the theory of the four “M”s.
Mervyn King is the first reason, he seems blind to the chaos his statements have caused and doesnt realise how much impact they have. Linked with this, I believe that the media is the second M to blame.
I believe that both of these factors should be willing to take most of the blame for the situation we all find ourselves in. The media are simply exacerbating matters with their constant negativity and messages of doom. It is enough to make the best of businessmen panic.
“M” number three to blame for the recession is the lack of MONEY from the banks. They got lazy during the years of economic boom and wound up alienating themselves from clients. In an attempt to aid the smaller businesses, the government offered their financial support to the banks. But as the banks are businesses as well, just like any other business they wanted to avoid risk and look after themselves. The government should forget about the banks if they really want to help out the smaller businesses.
Commendable though the governments new “pay all invoices in 20 days” scheme is, they have not taken into account that all contracts will be taken by the large contractors and smaller businesses are subcontractors that don’t enjoy the same high payment terms received by these larger contractors.
So now we’ve covered who or what is to blame, what do we do now we are here? Well, I do not think that recession is entirely negative, there are opportunities to be had. The way to seize these opportunities is to keep carrying out the fourth “M”. Marketing.
During the economic boom, we all did the same as the banks, got lazy. This is simply because customers were letting themselves in, buying products, and leaving without any real prompting. But suddenly as living gets more expensive, they won’t come in without a fight, this is why businesses MUST carry on marketing themselves. If you do then (based on the aftermath of the last recession) you will be sitting right on top of the pile when the smoke clears.