Recessions can make or break any business—and those in the accountancy industry are no exception.
Not only do you have to manage the disruptive challenges to your own practice, but your clients need guidance in navigating them too.
This can be done. And you can emerge even stronger than you are now.
With some expert insights from James Ashford, vice president of GoProposal by Sage, we share exactly how by covering:
- How a recession affects businesses
- Businesses that grow in a recession have different beliefs
- 5 elements of a business resilience mindset
- How to build resilience in your accountancy business
- Final thoughts
How a recession affects businesses
When a country is in economic decline, trade is generally reduced and there’s often a fall in its gross domestic product (GDP).
This can be worrying for businesses of any size and in any industry.
There can be drops in consumer spending, peaks in inflation, disruption to supply chains, employee redundancies, and many other challenges that threaten business stability.
In worst case scenarios, a recession can be the reason a business goes under. But time and time again, we also see them as the reason a business grows and becomes more successful. Many of today’s high-performing businesses even started in a recession.
So, how can such tough conditions lead to wildly opposite outcomes for different businesses?
We know that even giant, well-established businesses can go bust. Woolworths, MFI and Zavvi (the UK arm of Virgin Megastores) all fell to the 2008 recession alone.
This teaches us that surviving one isn’t guaranteed by:
- Being big
- Being established for a long time
- Having a lot of money
- Having large teams.
Many businesses can weather the storm, and come out the other side better, more competitive, and more profitable. Netflix is one such example that grew to the giant it is today after thriving in the very same recession.
So, what separates those that fail or go bust, from those that succeed and even grow?
Businesses that grow in a recession have different beliefs
The position your business will be in after a recession is not determined by your resources, but your psychology. What matters most is how you think.
Believing that a recession is an isolated period of difficulty will only put you on the back foot. James Ashford talks about the inevitability of not only recessions, but all the tough times you’ll face:
He says: “Storms are the only things that are guaranteed in business.
“You will always face tough times, whether that’s recessions, changing government policies, disruptive competitors, clients leaving, or staff leaving. All these things will happen.”
Acceptance that downturns will always come is a change in your fundamental belief. One that influences how you’ll think about and approach each day of adversity.
If you fundamentally believe your business might fail, you’re increasing the chances it will.
Why? Because this belief will lead to fear, and you’ll start taking negative actions that lead to negative results.
These might be:
- Reducing prices = Less revenue
- Pausing marketing activities = Fewer new customers and loss of market share
- Accepting poor behaviour from clients = Less profitability per client
- Denying salary increases for your teams = Low staff morale and resignations
Now, imagine what would happen if you changed that fundamental belief. What if you started to view a recession as a period ripe with opportunity? What results could you expect if you took positive actions?
These might be:
- Providing clients with more services = More revenue
- Improving or increasing marketing activities = More new clients and greater market share
- Increasing prices for clients that are prioritising their financial function = More profitability per existing client
- Making salary increases and investing in team training = Boosted staff morale and more skilled workforce
Suddenly, that recession looks a lot different, doesn’t it?
This shows you can paint a whole new picture of the future by changing what you believe.
Of course, it isn’t easy, and blind optimism can be as harmful as negativity. The key is to stay both positive and realistic.
This is an ongoing process because a recession won’t be over quickly. You’ll need to continually maintain a positive mindset that will keep you resilient no matter what happens.
5 elements of a business resilience mindset
Building business resilience into your accountancy practice will, of course, require a great strategy, the right actions, and getting the big decisions right.
But all of those are impossible if you’ve got the wrong mindset.
When you start from a place of negativity or defensiveness, you’ll struggle to come up with and execute tactics that keep your business financially healthy.
James shares his five essential elements to creating and maintaining the right psychology.
Get these right and you’ll build a foundation for resilience, on which you can execute whatever strategies that’ll help your practice grow.
1. Guard your mind
A huge challenge to ridding yourself of a harmful mindset is of the negativity that’s around right now. Especially in the news. The news cycle can make it feel like there isn’t a day without negative stories on a global scale.
But James reminds us why these stories always make the headlines:
He says: “The news has one job. Not to inform you. But to get you to watch it.
“The best way it can do that is to create fear. Why? Because our brains are hard wired to keep us alive.”
The pandemic proved this with how many people paid attention to the daily number of positive cases and death tolls.
With this in mind, it’s best to limit the amount of news you’re watching. And if you do tune in, get the information you need and leave.
For example, if you hear that interest rates have changed, find out what the new figure is and stop consuming.
Guarding your mind doesn’t just end with the news either. Well-meaning people around you may also cause negative thinking because of the fear they are feeling.
Now is the time to block this out. Get your head down and focus on what matters.
2. Pursue growth every day
Growth doesn’t just happen. You have to set aside time each day to make it happen. Whether it’s audio books, YouTube videos, podcasts, or courses, there are limitless ways you can become better, more positive, and smarter.
It doesn’t just have to be learning, either. You could spend time reflecting on your business, work on developing your processes, or meet regularly with your team to discuss what they need to do their best work.
Growth happens when you combine two things: proactivity and consistency.
The reason this approach is so powerful for your mindset is because it doesn’t allow recessive thinking to come in.
You have less headspace for fear when you’re proactively improving yourself and your business. You’re telling yourself and those around you that you’re on an upward trajectory.
Dedicate as little as 30 minutes a day to this and you’ll hardly recognise yourself when the recession is over.
3. Focus on your health
This is more important than your finances. And the state of your business. And your relationships.
Because if you aren’t physically and mentally healthy, you can’t do anything else or help anyone else. You can’t run your practice, make the right decisions, or support your clients.
And you certainly can’t keep a positive mindset during tough times.
“The reason you don’t find time to focus on your health is because it hasn’t been prioritised; it needs to be number one,” says James.
“You need to be spending 30 minutes to an hour a day getting your body moving. It doesn’t have to be anything crazy. It can be as simple as going for a walk. Get sunlight and fresh air. And do this every day.”
If you’re not used to prioritising your health, this can feel like a big change. But it doesn’t have to be. We’re not talking getting a six pack or running a marathon. It’s just about recognising that your health isn’t optional and making the decision to invest in it is important.
If you need support, work with a personal trainer, nutritionist, or both. Try joining exercise groups, playing a new sport, going for walks, or even switching to a standing desk. There are many ways to make positive changes.
Your mental health will benefit from physical changes you make too. And if you need more support in this area, prioritise talking to people you trust. Seek professional help with someone who specialises in offering mental health support if you need it too.
4. Aim higher
In times of uncertainty, it can be tempting to set the bar a little lower than you usually would.
That’s because when you’re faced with a steeper challenge than you’re used to, you tend to think or feel you’re more likely to fail unless you lower your ambition. But this is simply another negative belief.
In tough times, you should be aiming higher than you usually would.
That’s not to say have unrealistic expectations. But if you switch your beliefs to “it’s ok to aim high and fail”, you’ll likely achieve great things, even if you don’t quite reach your targets. You’ll certainly achieve more than if you start from a place of negativity.
Aiming low is the same as setting self-imposed limitations on what you can achieve. In an extreme example, you can set a ridiculous goal that seems ambitious even for ‘normal’ times:
Let’s say, double your fees over the next 12 months.
Even if you only managed a 20% increase, you’d still have achieved more than if you’d set a negative goal, such as reducing prices to try and retain clients.
Regardless of what you do, aiming high puts you in a strong psychological position. When you start thinking bigger, your staff will too, and so will your clients.
“The moment we start to become aspirational in our thinking is the moment our brains start to figure out ways to achieve things,” says James.
5. Give even more
To succeed in tough times, you need to go even further for your clients, industry, and the community around you. This doesn’t mean overworking for clients, allowing them to run you ragged, and not charging accordingly.
It means providing more value than usual. And there are endless ways you can do this.
You could create a social media group where you share general advice on changes in industry, start creating video content that passes on everything you learn, or put together some top tips on navigating a recession.
For your community, it could be volunteering, helping out a neighbour, or supporting a friend who is struggling.
It all comes down to having empathy for others and showing a genuine desire to help.
This is like jet fuel for your positivity. Because when you give something away, you tell yourself that you have more than enough, and that’s a very strong mindset. You’re thinking abundantly.
By being grateful, you also stave off the negativity, and can instead focus on growth.
How to build resilience in your accountancy business
Once you’ve got that positive mindset right, you’ll no doubt be taking some of the more expected business resilience actions to minimise down time, protect any vulnerabilities, and keep your operations running.
All of these are important to think about, but a recession is also a great time to assess and improve the foundations of your accounting practice.
Here are five ideas that will help you come out of a recession stronger:
Set new standards
Your customers are in tough times too. By raising your company’s standards, you demonstrate your value at a time where they need your guidance the most.
Think about your customer service performance, consider how you charge, and boost upselling of additional services that clients need.
When you set new standards at a time of difficulty, clients will remember you as the practice that stepped up when it mattered most.
Hone your processes
Of course, your practice is a business too. In difficult economic conditions, you need to evaluate your processes and find ways to be more productive and cost effective.
If there are bottlenecks in your workflows, it’s more important than ever to sort them out.
Honing your processes also helps with the point above. Try to improve how you work with customers, from proposal and onboarding to providing advisory services.
Ensure you have the right tech
Could you improve standards and operate more efficiently if you upgraded your tech?
If you’ve fallen behind a little in this area, it’s worth exploring which accounting solutions could be delivering you huge benefits, cost savings, and better client experiences.
From simplifying client management and tax to more insightful reporting and automated data capture, the right platform can take a lot of the sting out of recession challenges.
Recruit new talent
With many practices going on the defensive, the recruitment market will become ripe with opportunity.
Whether it’s redundancies or employees jumping ship, you’ll get chances to attract newly available talent, and inject some new energy, perspective, and skills into your business.
Many see recessions as challenging times for recruitment, and they can be. Just don’t let this belief stop you from seeking the people you need.
Invest in staff training
Your current employees will also feel challenged by a recession. It’s vital you demonstrate that they are valued, and that their jobs are secure.
There’s no better way to do this than investing time and money into their development.
Helping them become better will not only improve your service levels to customers, it’ll also spark more positivity and optimism at a time when this is essential for long-term resilience.
To help your accountancy practice make the most of business opportunities during a recession, you need to start building resilience.
This comes down to being open to changing your fundamental beliefs and accepting that these challenging periods are inevitable—even cyclical.
Remember, we may not know how long or deep winter will be, but we know it always passes.
So, don’t change direction, fall back, go on the defensive, or let negativity creep in. Switch gears to more positive thinking by following the five elements of a business resilience mindset.
Put yourself in the best possible position with realistic optimism and treat this as a chance to make some improvements to your accountancy practice.
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