With the Governor of the Bank of England, Mervyn King, recently commenting that the UK economy is entering a recession, pressure upon UK businesses looks set to increase. The global banking system is in a state of both liquidity and solvency crisis and has not been so close to collapse since the First World War.
So how will this affect those of us in business? We will no doubt see a continued decline in the availability of credit forcing us to seek alternative sources of funding for internal projects. Cost cutting strategies will certainly be on the rise and opportunities for additional revenue generation will be embraced if existing budgets allow.
I read with interest an interview with Russell Luckock, the current chairman of AE Harris, an engineering firm in the Midlands. Since they were founded in 1880 they have endured 10 recessions and his advice for riding the current economic storm was fairly straightforward; maintain focus on securing business and where necessary cut costs, remuneration and salaries. That way you keep people in jobs wherever possible thereby ensuring manpower is available to deliver against existing and new contracts.
In my industry, telecoms cost management, experience has shown that proficient management of telecoms expenditure can reduce overall telecoms spend by up to 15%. This money could then be used against headcount costs or re-allocated to new plans to stimulate additional revenue. Regardless of the economic climate; removing unnecessary cost must be seen as a significant benefit to any organisation.
Over the coming weeks and months, I will certainly be analysing all of the outgoings in my organisation and removing all expenditure that cannot be attributed to business growth or business stability. Working with my clients I will be ensuring that our capability enables them to eradicate unwarranted expenses in their telecoms estate potentially delivering profitability back onto the bottom line. Nobody wants to see any more companies following behind Lehman Brothers, HBOS or XL Airways; micro-management will be critical to the ongoing success of individual organisations and the UK economy as a whole.
The forecast may be for prolonged economic downturn but like Russell Luckock I hope we don’t talk ourselves into a deeper recession. Recession is not a new phenomenon and if we concentrate on core business and budget management, the good times will return once more.
