It goes without saying that the past few months have been exceptionally turbulent for so many businesses. With the recent news that the UK is now in a recession, it’s looking like there are even more challenges ahead, but as with any challenge, there also comes great opportunity.
According to the Enterprise Research Centre, from March to mid-April this year, 67,472 limited companies folded, with closure figures 70% higher this March compared to March 2019.
Running any business involves careful planning of expenses and taking time to balance outgoings with income to ensure the business remains robust, in uncertain times. In prosperous times, marketing activity can be a major expense, accounting for on average 11.2% of company revenue. When trading markets look less profitable, for many businesses, their first reaction is to reduce their marketing expenditure significantly. Before taking drastic action, it’s important to think about the true cost of this decision.
Weighing up the costs
During these difficult times, more often than not, marketing strategies seem to be the first thing to suffer, with many businesses choosing to halt all marketing activity altogether.
With COVID-19 forcing many businesses to close temporarily or work with reduced staff numbers via furlough, coupled with ever increasing cashflow pressures, it’s easy to see why marketing strategies can fall to the bottom of the pile of priorities. However, it’s important to remember that the cost savings of cutting marketing will only provide short term benefits, which the long term damage could far outweigh.
Customer communication and beating the competition
It is during times of hardship that marketing really starts to come into its own. Maintaining some level of communication activity during difficult times can ensure that when the markets recover, your business is front of mind for customers and in a stronger position for enhanced recovery.
Marketing is a great way to communicate with your customer. At a time when customers will themselves be feeling the sting of widespread uncertainty, maintaining the lines of communication can provide a valuable way to reassure them. During challenging times, customers will often review their buying habits and as a result, loyalty could waiver. So, ensuring you’re communicating with them and reminding them why they were so loyal in the first place, has never been more important.
In addition, as any business owner will know, being able to stay ahead of the competition is often the difference between success or collapse and while you might be tempted to put marketing communications on the back-burner, if your competitors are continuing their efforts, you could be setting yourself up for a fall if you don’t follow suit.
Reaping the benefits of a franchise model
Marketing plays a very big part in helping any business through an economic downturn, shielding it from the extreme effects of the recession or elevating it when the economy is on a more solid footing. That has never been truer than for the franchise sector, which often fares better during economic downturns than independent businesses.
One of the greatest benefits about owning a franchise is the ability to be able to tap into the marketing strategies provided by the franchisor, providing much-need support at a time when so many are struggling. For existing franchisees, they have the support of a national marketing plan that they can layer their own local activities over. This ensures that no matter what happens – in good times and bad – they always have a base level of marketing activity so they can focus on other important areas of the business such as prospecting for new customers and growing the business.
During the current pandemic, our franchisees also benefited from scenario-based market planning, coaching sessions and flexed marketing messages to help them through these difficult times.
Recessionary periods are a great time to consider franchising as an alternative career path as it means you are in business for yourself, but not by yourself. The risk of launching your own business can seem daunting. However, a good franchisor should have a tried and tested model that mitigates the risks and a blueprint for understanding costs, length of time to break even and profitability. On top of all that, you also get a network of likeminded people to support you in your business’ launch and growth.
No one can be certain what the future holds for the UK business market over the coming months. However, one thing that we can be sure of is that this current economic downturn won’t last forever. Becoming a franchisee is a really viable way of putting yourself in good stead for weathering whatever storms the coming months will throw your way. It really could be the difference between a business success story or becoming another UK business casualty in the wake of COVID-19.
