Recession Proof Your Business
Many businesses and their employees are facing challenging economic times. Credit restrictions, job losses, sales cutbacks, soaring energy prices, mortgage foreclosures and a downward economy makes it hard to successfully run a business. Here are some of the basic ideas to keep your business profitable in tough times:
- Don’t stop marketing. It is tempting to cut marketing as sales decline. In the short run that false economy may increase profits. In the long term you may lose customers and sales and ultimately decimate your business. Instead, try to cut back on lower return advertising and emphasize the more efficient methods of promoting your business. Focus marketing on those customers that are most profitable to your business.
- Do Financial Analysis. This is the time to check the numbers, consult with you tax attorney and account, and determine how to increase profits and lower taxes. Make the changes to increase the efficiency of your business.
- Develop a Plan for Efficiency. Revise your business plan and budgeting process to squeeze out the efficiencies in your business. Look at the long term. If you cut-off a customer’s credit, will you lose the customer in the long run? If you play money games with suppliers now when you are needed what about when demand from other customers increases?
- Optimize Cash Flow and Capital. In a turbulent economy, your business needs cash to pay its bills. Cash is needed to implement growth plans and take advantage of business opportunities.
- Look for Buying Opportunities. Some of your competitors may need to scale back or sell outright. Look for good deals that can position your business to take advantage of economic growth.
- Be fair to Employees. If you have rounds of across the board firings, your employees become scared and good employees will look to your competitors for job opportunities. Employees work for your business because the seek the security of a continual paycheck.
A recession may be the opportunity for your business to grow market share, cut expenses and increase efficiency. Be prepared.