Depending on how old you are, this could be your first real economic slowdown. giftal login But whether it’s your first or third, this is the worst we have seen in 70 years. Sure, we will get through it and will come out stronger. But does that mean that it will not happen again. Not at all. This time we brought it on ourselves and we may have learned our lesson. But it’s a global economy the next recession may be triggered by something that happens far away in India or China.
The smart business owner will be looking at ways to recession proof his business. It’s not easy but if you follow these 6 tips, you can make your business recession proof as possible.
1. The most important thing you can do is to protect your cash flow. When things get hard, your customers may delay payments or renegotiate payment terms. You can’t say no, but your cash flow will be hit. And while cash is reduced, business needs to carry on and you can’t run your business without money. Recession means banks will not raise your credit limits.
There are many things you can do to protect your cash flow but the most effective way is to control your outflow. How much can you outsource? Outsourcing is not a cure for all ills, but it will reduce your expenses and rather than having a regular outflow of money, you will need to make one consolidated payment per month for each outsourced operation. That makes money management much easier. There are lots of other things you can do to control your expenses. You will find hundreds of books, magazine and internet articles devoted to this. Go through them and find what will work for you.
2. Can you control your inventories better? That does not mean letting your quality or of deliveries suffer. But can you find a cheaper supplier (maybe nearby with lower shipping costs). Are any items over stocked? Are there drop shipping alternatives you can look at?
3. Continue to market your business. A recession is when customers get restless and look for cheaper sources. It’s easy to cut back on marketing expenses in a recession but low levels of marketing activity and restless customers is a recipe for disaster.
4. Your customers, even if they stay with you, will be ordering lower volumes. To protect your business you need more orders and the only way you can do that in a recession is by taking your competition’s customers. Research what they do and find ways to beat them at their own game. There will be no new markets opening up during a recession.
5. Your credit rating is not limited to your business. Your personal credit rating also plays a part. Make sure that you protect both. It’s easy to let your personal finances suffer while focusing on keeping your business afloat. But a business owner with a bad credit rating will always be a lending risk, even if the business finances are in good shape.
6. Focus on your core competencies. Outsourcing will allow you to focus on what is important. Stick to that and don’t try anything new in the way of products or services just to make your company look more attractive. Focus on what brings in the money today.