Are we in a recession? I am not sure. Over the past few months, a slew of pundits (local, regional, international) have cried “downturn,” and predicted economic implosions, adding to the already melodramatic 24-hour news cycle, and along with it, our collective anxiety in the UAE.
But, if you take a breath and step back, the bigger picture is not as bleak as you would be led to believe, because, as of now, the UAE is healthy and thriving. The key cities of the nation continue to be productive economic centers– well-oiled machines driving forward, and presenting opportunities for growth and advancement to its entrepreneurs.
Having said that, it won’t be a smooth sailing all the way. We cannot dismiss the fact that we live in a volatile region that is intertwined socially, politically, and economically. We will feel tremors when our neighbors are shaken up by internal and external forces, or if global trade routes and networks take a hit. So, instead of sowing the seeds of panic, and letting them develop into an actual crisis of confidence, we need to plan during robust economic times, and fortify our skills and resources. Recessions are worrisome for everyone, but owners of SMEs feel especially vulnerable during a downturn, due to reduced opportunities to grow, and increased pressure to succeed.
SMEs do need to plan better than most; not because they are the weakest segment but quite the opposite: startups and small business are best placed to make the most out a recession, as it throws open opportunities that are not available in an economy dominated by business behemoths. Here’s how:
1. Keep your books balanced, and explore alternative payment methods At the Co-Working PopUp, we work closely with and support a lot of rapidly growing SMEs, and what they have in common are tightly balanced books and responsible spending and accounting practices. Because SMEs find it more difficult to get credit or benefit from economies of scale, every cent matters. Following best practices in accounting and saving will naturally pay dividends during a recession thanks to the healthy buffer it provides. Small business owners also have the need and capacity to explore alternative payment methods, such as barter systems and stocks. Instead of cutting back on costs by making employees redundant, SMEs should offer HR alternatives like a four-day working week or flexible working hours.
2. Strengthen your personal connections Although professionalism is key, it does not hurt to foster friendly relationships with your clients. Successful small business owners tend to forge personal and meaningful connections with their clients and consumers. Along with likely enriching one’s life, this also leads to benefits during a downturn, as it also allows entrepreneurs to have open and candid conversations with their clients, and better understand their needs and wants. A client or customer is also less likely to cut ties with a supplier, whose work and personality they like. Instead, they might opt to re-negotiate terms to mutual benefit.
3. Expand your employees’ potential Recessions can be demotivating to employees in big businesses, but within small businesses, a recession is a good opportunity for employees to get more involved. Small businesses work with limited manpower in general, so most of the employees are cross-trained by default. So, strengthen employee skills, and give everyone an understanding of the nuts and bolts of the business right from the get-go. It can be beneficial to both employer and employees during the recession, and help all parties double-down to make the business work.
4. Activate those fun and unique promotional ideas Opening a business is a big risk in itself, so SMEs should find it easier to say yes to unconventional marketing ideas or quirky social media videosremember that Dollar Shave Club ad? Big businesses cut back on marketing spend during hard times, but small businesses are agile, and not lumbered with approvals for off-piste promotional ideas. So, this is the time to unleash all that creative power, and take the dive.