Strategies for Business Survival during Recession
Government has announced a lot of measures to counter recession. However, recession is not going anywhere and we’re still on the downward slope. Decline in consumer confidence and decreased sales threaten all businesses, but small businesses are particularly vulnerable as they often don’t have the reserves to help them weather difficult times.
How, then, can your recession-proof your business?
Like dangerous curves on a racetrack, economic downturns create more opportunities for companies to move from the middle of the pack into leadership positions than any other time in business.
Unlike straight-aways where leaders can thrive on raw power alone, steep curves require strategic finesse. That often results in dramatic differences in performance as leaders steer out of the curve.
1. Company Core Strength and USP (Unique Selling Proposition)
Focus on what the company does best, its core strength and USP. Make bargain acquisitions to build up the company’s core, even when it means taking calculated financial risks.
2. Reduce Your Debt
Do all you can to ensure your debt is low enough so that if you lose some clients, you can still survive. Keep your credit card debt as low as possible.Manage costcarefully and consistently.
3. Build Your Cash Reserves
Ensure you have adequate cash reserves so that if some of the client’s default on payments, it doesn’t adversely affect the organizations financial position. 4. Do Not Be Reliant on Just One Big Customer
What if you lost your biggest and best client? Where would you be? Now is the time to ensure you have a great variety of clients and a decent number of clients, so if you lose 10 or 20% of them, you still have sales.
5. Customer Centric Approach
Making customers a priority in an economic downturn may also involve:
• Running customer loyalty or reward programs
• Adapting your products and services as per customer requirements
6. Build Service Contracts with Future Work
Ensure that structure your service contracts in such a way that you have future work already built. If you are able to secure contracts for on-going work, then you’ll have a buffer if one-off work is cancelled.
7. Inventory Control and Diversification
Have a greatcontrol on inventory and, if you need to, can cut it back slightly and still have everything you need for your clients. It’s best to be able to order from apool ofsuppliers instead of relying on one supplier.
8. Marketing your business
It can be an expensive exercise, and during an economic downturn it’s especially important to explore free marketing tools available to you, including social media and word-of-mouth advertising.
It’s tempting to slash prices to drive more demand, but that’s not a sustainable practice. Instead, change your marketing message to highlight your amazing value.
9. Managing Employees
Build morale and motivation by clearly communicating with your staff what is happening within the business. Try to involve them in decision-making and finding solutions. If you do need to let some staff go to save money, make sure you understand your obligations for ending employment. You may also consider training your employees to undertake more duties.
10. Networking
During a slowdown, networking can be useful to understand how other businesses are coping. You may also discover new opportunities, customers, staff, suppliers and business partners with minimal cost to your business. Consider forming alliances with other business, for example, by offering complementary services and discounts.