One word that’s a part of every conversation today is the Coronavirus or COVID-19. From lockdowns to the measures taken by different governments of various countries to the economy that is suffering and will continue to suffer in the long run, it has become an unwelcome part of our lives and has brought everyone’s life to a standstill.
At a time when the entire world is experiencing uncertainty with heightened speculation due to COVID-19, businesses around the world may be on the brink of another economic downturn. While a decline in a consumer’s confidence and a decrease in sales threaten a business from time to time, it is usually a smaller business that is particularly vulnerable as it often does not have adequate reserves to help pull through difficult times. And with over 30.7 million small businesses in the U.S. which account for approximately 99.9% of all U.S. businesses, it is a matter of concern.
So how can you safeguard your small business and make it recession-proof during the Coronavirus pandemic and even after that to stay afloat at all times?
To begin with, adversities like such also opens opportunities for resourceful firms to outsmart larger competitors who are unable to carry on business as usual or are unable to adapt quickly during such a downturn. A small business owner can:
- Gain a large market share by leveraging the competitors who are unable to adjust to shifting market conditions.
- Maintain liquidity through a strong cash stream throughout the downturn.
- Lead the team and entire business to be more cost-effective and have a more efficient operation, thus better positioned when the market improves.
- Monetize expertise with a revised and clear strategy developed for a profitable business model.
More than anything, it is the best time to rebrand your business’s identity and redesign its strategy for a more robust marketing plan that can help your business thrive during and after the pandemic is over and normal life resumes.
Here are a few of the best practices to follow in detail that can help you prepare for the next upcoming months and help ensure your small business’s survival and even allow it to thrive during tough economic times.
Protect Your Cash Flow
More so to safeguard your business during tough times, it is important to monitor your cash flow very diligently to be able to forecast it monthly and ensure that all expenses (salaries, rent, electricity, etc.) and planned expenditures (inventory, expansion, etc.) are in line with accounts receivable. This can be done by monitoring financial statements closely as they provide information that is timely, relevant and accurate. Moreover, cash flow statements also help in projecting where you will stand three months in advance, thus ensuring you are can take action in a timely manner.
Along with, negotiate with contractors, suppliers, and landlords for competitive prices or short-term reductions. In case you foresee cash-flow as a problem you may even consider trading goods and services on a barter exchange for credits. Make certain that you take advantage of supplier discounts for prompt payment and avoid paying checks for bills before they are due. In case of scarcity in cash flow, it is advisable to keep creditors informed before the bills are past due to persuade them in extending payments of your current bills. This chance of getting their cooperation will lessen if they start sending collection memos. You may also seek the help of Bizness Pros at. 1-844-368-0620 holding expertise in projections to help you make the right decisions.
Secure Capital Well In Advance
A golden rule of business financing is that the best time to look for capital is when you don’t need the money. This is because financing can become a considerable challenge during a downturn and it is also a time when capital can essentially dry up for small business owners. Moreover, many traditional banks stopped lending to small businesses during the recession, forcing many to dramatically scale back operations or worst case, file for bankruptcy.
Having access to working capital is the key to navigate through a downturn and the best time to secure the financing it hits your small business.
Keep your Personal Credit in Good Shape
Hard times like this when a major part of the world is in lockdown make it even more difficult to borrow. While the government and financial institutions offer great schemes, they won’t be of much use unless you have good business credit and most importantly better personal credit. Having a clean background of timely repayments helps you stand a much better chance of being able to borrow the money needed to keep your business afloat when you need to. To recession-proof your business, check your personal credit rating as frequently as you check your business one and take the right steps in ensuring your credit ratings are in good shape.
Review Inventory Management
When preparing for a recession one important aspect to consider is reducing inventory costs without compromising the quality of goods or causing an inconvenience to your customers.
There is like to be an imbalance between slumping retail sales and bloated inventories during a slowdown that can leave you with leftover merchandise that blocks up your cash flow. While converting inventories into cash is an ideal practice, however, you must do so keeping in consideration that it is not costing you much. Monitor the sales results and keep an eye out for products that can tolerate even leaner inventories. You may also consider this to be a good time to eliminate certain products from your stock and make room for better alternatives.
Focus on Core Competencies
For the service industry where you are not selling a commodity but expertise, it is a good practice to focus on the core competencies of your business. While diversification as a strategy for small business success is also a good idea, however, many small businesses often simplify the concept of “diversification” to “different” thus side-tracking from what they are experts in.
Merely adding new products or services to your offerings is not diversification and can also damage your core business by taking your time and money away. Instead, invest time and efforts in services you offer best without damaging your brand and reputation. Try and improve it to diversify but shy away from adding new services to a well established and smooth functioning business. Diversification also helps you in making your business recession-proof by having multiple revenue streams. This also gives you the opportunity to bring in revenue at a wide range of price points making it easier for your business to stay flexible and be able to persevere.
Focus on Your Employees
Your employees are a critical part of your business and are suffering as much from the Coronavirus pandemic and recession as you are. Having a cohesive team is crucial for any business to operate when it is trying to survive a downturn. To begin with, communicate clearly about the state of the business and the industry altogether to help your team prepare for a downturn.
It is also advisable to get employees involved in policy choices as well as strategies, tactics, and implementation. If layoffs are unavoidable by working around a significant reduction in work hours, let them take a lead role in designing the program. As a leader, it is also critical that you meet with your staff regularly and exchange ideas on boosting productivity and market your products and services. Always remember that an employee must feel that they are important to your business and that their work is challenging them up to their full capabilities in such crucial times.
An important aspect of having a good and supportive team is how you build a team and expand it. Hiring judiciously is the key here. Expanding the business may be a tempting idea when times are good, however, hiring additional employees must always be based on a clear business strategy.
Cut Down on Unnecessary Costs
Instead of trimming down your team, it is beneficial to cut down overhead costs that are unnecessary and nonessential for your business’s survival. Simple solutions like a cheaper space for office, carpooling, email marketing instead of cold calling, etc. can make a difference.
Don’t Ignore the Power of Marketing and Engagement
One thing that small businesses often do in lean times is making the mistake of cutting their marketing budgets or even eliminating it entirely. On the contrary, lean times are exactly when your small business needs marketing.
Recession makes a consumer restless and looking to make changes in their buying decisions to save money. Helping them find your products and services gives them a chance to choose you rather than others by getting your name out there. Step up your marketing efforts by being creative during such times. Reach out to them through social media rather than traditional means of marketing which is expensive. A study also found that 64 percent of small businesses use social media in their marketing strategy as using the internet is not only cost-efficient but also helps focus on existing clients by spreading the word of an incentive amidst them first.
Check On Your Customers
You can avoid unpleasant surprises by keeping an eye on the creditworthiness of your customers by remaining close to the customers and checking how they are getting on during the economic downturn. This could also lead to new opportunities as staying in touch with your customers even when sales are low is vital to head off eager competitors.
Frequent phone calls or face-to-face meetings with your customer base provides an excellent opportunity to pacify disgruntled customers by offering better services and win back lost ones. Another strategy that can work in your favor is to try and lock up long-term contracts with your most important customers at acceptable terms.
Ideate and Implement Strategies to Attract New Customers
One thing that would help you going through the recession is expanding the customer/client base. This means drawing in customers from the competition. You can start by giving your business a new look and personality while keeping the same old identity. This often gives the illusion that your business is doing well, and they will not be in loss. The best way to do so is by brand building with the help of Bizness Pros at 1-844-368-0620.
Once your business has a new look to it, the next step is to offer something more or something different than your competition does. The first step towards this to research your competition to see what you can offer to entice their customers into becoming your customers like providing better customer service.
Leverage on Current Customers and Clients
While you work on bringing on new customers on board, do not neglect the old ones. Your current customer is an opportunity to make more sales without incurring the costs of finding a new customer, and even gain credibility that can help when you reach out to more people. Ignoring the potential profits of shifting your sales focus to include established customers can lead to a downfall. Focus on your best current customers to create the best results and experience for them. Moreover, it is much easier to get repeat orders from an existing client than getting new clients through ads or other means.
Amidst strategizing how to build your customer base the importance of good service cannot be over-stressed. More so when their buying power or willingness to spend is also lessened during tough economic times. Lay emphasis on the important role that all employees play in meeting customer needs for attentive and timely service that will keep them happy and be your brand ambassadors for word of mouth marketing.
Conclusion – to sum it up
The time to take such decisions that can help you stay afloat during a recession is now. Position your business for success now before the economy starts to slow. It is the right time to help your business grow even faster to help you save money for the long haul and have a steady and smooth function that survives.
Recognizing the chances to make any adjustments needed to leverage the opportunities that inherently arrive in a recession can keep your head above water and your business profitable. Most importantly, do not panic. A fear-driven panic that is not based on fact has the power to change the direction of the business and take it downhill with the wrong decisions. The alternative to panicking is confronting change that can give you opportunities to advance.
In all of this, it is important that you have the right partner to help you make the right choices. Look for experts who offer 360-degree solutions that can not only help you structure your business and lead it to profit but do so with the right kind of advertising.