The year 2020 hasn’t been great for the global economy. The UK, like other countries, is facing a recession that seems like it will only get worse as the year goes on. In Q1 of 2020, UK GDP fell by two percent, which suggests that COVID-19 is having a dramatic effect on the economy.
Even though some aspects of the economy will come back once restrictions are lifted, it’s safe to say that getting through 2020 is going to be a challenge for many business owners. If you own a restaurant or café, you may be wondering how you’re going to be able to stay in business. Even when people are allowed to dine in, you’ll need to operate at a lower capacity than usual. On top of that, diners may not want to take the risk of eating out.
That’s why it’s essential to focus on your operations. While you don’t have control over when a recession will happen, the way your business operates is still very much within your purview. Take the time now to focus on how you can recession-proof your business so that you can continue to operate even amid a recession.
5 Ways to Recession-Proof Your Business Operations
When it comes to recession-proofing your restaurant, it’s important to carefully look at how your business is operating first so you can identify places where you can cut costs and become more efficient.
1. Reduce Debts
When a recession hits and you’re hurting for revenue, you’re going to need to use the cash reserves you have on hand to cover your expenses. Having to pay large debt payments on top of monthly costs will be detrimental to your business and could be what forces you to close your doors for good.
When times are good, make sure you are making payments toward your debt. Put extra toward your debt when you can to reduce the total amount you owe and possibly lower your monthly payments. Focus on paying off high-interest and high-risk debt first to free up cash.
If you are struggling now, then follow the same advice of focusing on making your high-interest and high-risk debt payments first. Falling behind on these payments will make it difficult to recover from the recession once the economy bounces back.
2. Invest in Innovative Technology
It seems counterintuitive to spend money as you’re preparing for a recession, but investing in the right type of technology can help you identify problem areas earlier rather than later. Business Intelligence software, for example, can show you exactly how you are spending money so you can determine where you can cut costs or negotiate a lower price.
Understanding how your business operates using the analytics you gain from intelligent software will help you know where to cut back when a recession hits. For example, you can learn when your busiest times are as well as your slow times, so you know when you can cut way back on staff. Knowing how and where you are spending will also help you save on expenses, so you will have more money in the bank when a recession hits that you can put toward monthly costs.
3. Cross-Train Your Staff
The members of your staff are your most valuable resource. Unfortunately, when a recession hits, business owners are often forced to cut down on the number of staff members they can employ. Take your time hiring and identify who your superstars are, as these will be the employees who help your business get through the recession. In addition to training them on the technical aspects of their role, train your team to focus on sales so they can upsell to customers and add to your revenue.
During a recession, you may have to run a lean operation that relies on only a fraction of your regular staff for a while. Cross-train all of your employees now so they can be flexible and work in multiple roles if needed. The staff members who are left will need to be capable of adapting to change and working hard to boost sales while delivering exceptional service to your customers. They also need to support you and your business, so make sure you are treating them well as an employer.
4. Negotiate with Vendors
If you have been using the same vendors for a while, now is a good time to talk to them to see if you can negotiate better prices. You should also do a little shopping around to see if there are comparable vendors who can get you what you need at a lower price point. It’s a good idea to have relationships with multiple vendors. A recession will also impact them, and you don’t want to be left without supplies if your sole vendor ends up going out of business.
Talk to local vendors, as they may be able to negotiate easier than large vendors. They also may be less expensive because they don’t have such high shipping costs. When gas prices rise, larger national firms may be more inclined to raise rates for their clients.
5. Experiment with New Revenue Avenues
If your business is strictly focused on dine-in experiences, experiment with different revenue avenues that could help keep your business afloat when people stop dining out. Takeaway, delivery, or business catering can all be lucrative for you. Keep in mind, changing your business model will add operational costs and logistics. Think through your options carefully ahead of time, so you aren’t forced to make quick changes (as we have seen restaurants do during COVID-19).
This is another area in which having Business Intelligence insights can be beneficial. You may be able to utilise your downtime to serve another purpose.
Bottom Line
The recent global pandemic has forced a lot of business owners to make sacrifices and adapt quickly. Ideally, when a recession hits, you will already be positioned to weather it. Follow the steps above so that your business operations are ready for anything, including a recession.
