Emerging from the recession

Mike Jenkins, HVCA Business Plus
Light at the end of this recession tunnel — Mike Jenkins

Reports that the recession is over doesn’t mean we are out of the woods yet. Businesses need to hunker down and maintain good relations for the long haul recovery, as Mike Jenkins explains.

The construction industry came out of recession in early December, according to the Office of National Statistics (ONS). Figures show construction output rose in the third quarter of 2009 by 2% compared with Q2 2009, with a quarter-on-quarter growth in output indicating the end of recession.

Building services, such as repair and maintenance work, totalled £11.4 billion, up 10% on Q2’s £10.3 billion. The biggest growth sectors were public-sector non-housing repair and maintenance work, up 26%, and public sector new housing, which was up 14%.

It may appear to be good news, but the construction industry was among the hardest hit in the longest UK recession on record. The ONS figures also show that the industry’s output of £25 billion last quarter is 9% down on Q3 2008’s figure of £27.3 billion. Private-sector new commercial work is down 11%, and there has also been a fall in new work of 4% from £14.2 billion to £13.6 billion. In addition, the current rise in repair and maintenance work may be short-lived, particularly as public-sector repair and maintenance work will come under increased budgetary pressure over the next year.

There is light at the end of this recession tunnel, but reaching it is going to take some determination. The difficult part will be persuading the public at large that spending can resume once more. The banks and the Government are keeping a tight grip on their purse strings and constantly threatening us with increased taxes to recoup the banks’ losses. The recession may be over technically, but the recovery will be long and difficult.

To help businesses survive the recession, HVCA Business Plus published a series of four ‘Better business guides’. The first lists 10 simple tips to survive the recession, which include: barter over prices, woo your bank and remember your regulars. Let’s look at these tips in a bit more detail.

The results from the ONS indicate that there is work out there, so you have to ensure you win the contract. This means that you must be competitive, offering the best price for the best quality work. To this end, know what your competitors are charging and their standard of work. Equally important is that you obtain the best prices from your suppliers; know their market too and don’t feel shy in asking suppliers for a better price, even if you have been with them for years. If you are getting the best price from your suppliers, you can then pass this on to your customers and everyone feels happy with a bargain.

Second, the days of you and your bank manager being on first-name terms may have changed — banks regularly move their staff between branches — but don’t underestimate the power of your reputation. Woo your bank, not the individual. Treat your bank manager, and all subsequent managers, like your favourite uncle. Maintain a polite but close relationship with regular contact, keep him fully informed of your circumstances and do exactly what you say you will do. Always be fully aware of your financial situation and never shy away from difficult conversations. Many businesses have survived this recession thanks to their relationship with their bank.

Third, remember your regulars, without whom your company may have succumbed many years earlier. If they are regulars, they have probably stayed with you because of your quality of work and reasonable prices. By remembering that this recession has affected everyone, a gesture to your regulars showing how valued they are can work wonders.

The HVCA, together with all its subsidiary companies, provides a great source of advice and guidance, presenting reliable and affordable ways of improving your business’s efficiency and profitability. HVCA members have access to advice and guidance on employment law, people management, systems and procedures.

For more details visit the web site below or freephone 0800 9171541.

Mike Jenkins is business development manager of Welplan and group co-ordinator of HVCA Business Plus.

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