The Reserve Bank of Australia (RBA) announced today (7 March 2023) our tenth consecutive increase in the official cash rate. This means interest rates are the highest they have been in over 11 years.
We’ve seen rising fuel costs, interest rates climbing, returns on investments going down, grocery store prices continuing to increase week on week. There are dire warnings about the economy sliding into recession. For those of us who remember the last “recession we had to have” in 1990 when interest rates reached an all time high of nearly 18%, it’s an unnerving time.
In the current economic climate many business owners begin to worry how they’re going to survive the recession should it eventuate. It’s a legitimate concern.
Generally there are two options: cut expenses or increase revenue. It’s hard to increase your revenue if demand for your product or service reduces – since people tend to react to warnings of a recession by tightening their belts and spending less – especially when they’re trying to keep a roof over their heads. So, many business owners choose the first option and begin to rethink their expenses.
If you’re going to stay in business the best way is to reduce your overheads. Makes sense: reduce the amount of money going out whilst maintaining the amount coming in.
One of my own clients though, consultant David Ogilvie, says that blindly cutting costs is often a strategic mistake.
The biggest overhead for many businesses is the cost of staff. If you aren’t aware what your onsite staff are costing you in real terms, have a listen to Episode 58 of The Virtual Business Show podcast.
But how can you stay in business if you don’t have adequate staff?
One solution is to outsource your non-core administrative tasks to a virtual assistant – or remote secretary. Episode 60 of the podcast goes into much more detail about what a VA is and what we are not including a quick list of the things we actually do – you can also find a list at the blog here and in my ebook: ‘105 Things a VA Can Do … and the 1 thing they can’t!’
But to recap: Virtual Assistants (VAs) are independent business owners who provide secretarial and administrative services to clients, usually from a home-based office. They are contractors, and will charge an hourly rate or per project rate, invoiced at regular intervals – the cost of which is fully tax deductible. Since the VA is not an employee, clients are not responsible for the traditional staff on-costs like superannuation, leave loading if applicable, time in lieu, worker’s compensation, and payroll tax. So whilst the hourly rate of a professional, experienced VA might appear quite high at first sight, it can actually end up costing the business significantly less than on-site staff when those on-costs are factored in. In addition, the VA will only work when required, so clients pay only for time on task – and not for time taken for cigarette breaks, lunch or chatting with office colleagues.
By rethinking the way your business handles its administration there may be an opportunity to retain a core team of administration staff, and outsource the remainder to a VA – or even more than one – saving the associated on-costs. In this way, you can keep your business running through the difficult times until things pick up again, at which time you can either continue the VA partnership, or build your staff levels again.
If the economic climate is really biting hard and you have to relocate to smaller premises – or home based – a VA is a great solution because you don’t need to provide them with equipment. Working from their own office, there is also no need for you to provide space, furniture, lighting, power, telephone, and internet connection.
The alternative to cutting back on staff is to increase their productivity. A VA can help you in this regard too. Personal assistants are required to do more than just type letters and make coffee. Many are instrumental in the running of the business: scheduling appointments; arranging sales calls; fielding customer complaints; arranging travel; juggling multiple diaries; supervising junior staff. Outsourcing those tasks your PA doesn’t have time for – dictation, document formatting, mail outs, report preparation, presentations, emails, setting up online meetings and sales calls – can free them up for helping track down new business, research leads and other revenue-generating activities, whilst still enabling the day-to-day work flow to proceed.
A VA can handle a great deal of the projects in-house staff would normally look after. Many VAs assist their clients with bookkeeping, internet research, corporate travel, looking after customer mailing lists and mail outs, website maintenance, marketing activities like gift purchases for your clients and social media management, arranging holiday cards and gifts, handling customer orders including processing and shipment – as well as personal tasks like booking holidays, researching better insurance deals and reminding clients of important dates.
If you have sales staff on the road, you can increase their productivity by having them utilise the services of a VA. Instead of waiting until they return to the office to input data themselves, the sales team can be dictating follow up notes ‘on the fly’ using either a dial in system or digital voice recorder, for transfer to the VA who can then input the information directly into an online database or customer relationship management program like Act! or Less Annoying CRM.
When a recession is on the cards, another key way to ensure survival is to step up your customer service. If demand for your service or product has gone down and you can’t or don’t want to cut overheads and/or staff, then ensuring you provide stellar customer service to ensure your existing customers keep coming back to you is another way to survive these uncertain times.
I speak often on the importance of customer service. You can find that topic covered at the podcast and also in upcoming articles here at the blog.
By utilising the services of a professional virtual assistant your business stands a good chance of surviving in difficult or uncertain economic times, without the need to lay off all your staff, overload existing staff, or wind up doing all the work yourself.
There is an interesting discussion on YouTube between Elon Musk, Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg. They elaborate on the economy going forward and explain what to avoid during a crisis in order to stay afloat, survive, and come out ahead on the other side.
Watch it here.