It’s been a gloomy start to 2023, with constant warnings of an economic downturn approaching the United Kingdom. Business and consumer spending is being impacted by soaring energy prices, the Ukraine war, and a cost-of-living crises that is making it hard to stay positive and motivated.
However, this article does not aim to fuel this demotivation. Instead, we’ll elaborate on what small business owners can do to adapt and overcome these challenges, and why small business acquisitions are still a pragmatic process.
Key points:
- Economists encourage businesses to learn how to navigate the expected recession
- The state of the economy is the top concern for 71% of UK consumers
- Business owners should focus on growing their core activity, and be vigilant of where their market is heading
- Economic downturns can be a practical context for M&A
How business owners can navigate the expected recession of 2023
This is not the first challenge businesses in the UK have had. Recessions and crises come and go, and business owners learn to adapt and survive through difficult conditions.
It can be tiring and resource-consuming, but there are a few ways business owners can navigate the predicted recession of 2023.
Focus on your core business
Investing resources into new projects may not be the best strategy right now. We recommend focusing on growing processes that already work. Whether this is through reorganisation, improving efficiency or subtly increasing prices, it’s crucial that you focus on core activities to survive and grow.
Likewise, business leaders should be vigilant of their market whilst simultaneously remaining competitive.
Adopting digital technologies
Small business owners should seriously consider investing in digital technologies to improve their efficiency and productivity. This strategy can also maximise sale value during acquisitions, and help buyers sustain and grow the business post-sale. A report by Sage indicates that 8 out of 10 UK small businesses are relying on technology to survive and grow, which is crucial during economic uncertainties.
“We’re an SME, and our business is more resilient, scalable, and valuable as we’ve become more embedded in technology,” says BusinessesForSale.com CEO Andrew Markou. “We now employ people across all continents, across all departments. Tech has become the star, and that is where the value is,” he adds.
We understand that this may not be possible for small business owners who are still overcoming challenges from the pandemic. Time and money are not infinite, so we’ll propose other ways to ensure you survive the oncoming turbulence of 2023.
Supporting employees and customers
Employee and customer retention has never been a more important expectation. Business owners need to treat their employees with kindness and empathy. You need to ensure you pay adequate wages and reward dedicated and diligent employees. High staff turnover is a threat that can be prevented by building a productive culture that can survive and potentially flourish in a recession.
It’s also essential that you create a seamless and engaging experience for your customers, whether that’s through optimising your website, producing useful and relevant content, or offering promotions and discounts. Most importantly, you need to listen to your customer’s pain points and act by providing solutions.
Is it a good time to for small business acquisitions?
It depends on your industry, exit strategy and how well you’ve laid out your groundwork. An article by Business Leader indicates that the following sectors will experience healthy M&A activity:
A key insight from this article indicates that small tech businesses should avoid wrestling for acquisitions from larger companies. Instead, focus should be on opportunities for collaboration and joint ventures with smaller firms.
Likewise, an article by Raconteur indicates that companies who are cash-rich should consider M&A deals. Based on findings from the 2001 recession, companies who pursue M&A deals in this recession may experience a higher shareholder return, and ultimately come out of the recession stronger.
Finally, it’s important for business owners to understand that selling a business doesn’t always mean exiting it for good. Finding a strategic or financial partner can help you build a more secure and resilient business that is able to overcome difficult economic conditions.
Overcoming challenges through resilience
It’s clear that 2023 is going to be another challenging year, but downturns are not ambiguous characteristics of market economies. That’s why there are strategies to overcome them. Instead of focusing on warnings signs, fear and what-ifs, this year can also be defined by adaptability, resilience, and success.
If you’re a small business owner looking to sell their business, you can advertise your business for sale and find the right buyer on BusinessesForSale.com.
If you’re a buyer looking for a business in a recession-proof sector, you can browse different business categories on our site. You can also use our advanced search capabilities to refine your search and find a business that matches your financial requirements.
We hope this article has made you feel more confident in this year. If you’d like to speak to someone in the team about small business acquisitions, please feel free to contact us.