With the threat of a recession looming over businesses, there are several ways you can adapt to survive in anticipation of a recession. Characterized by slow or negative growth in production, an increase in unemployment, declined consumer confidence, an economic downturn creates the perfect conditions for a succession of business failures.
With your business in a highly vulnerable position, it is vital to implement measures to provide a line of defense to come out of a recession perhaps not unscathed, but in a far better situation than businesses that don’t. Before going into survival mode, applying these 10 strategies will best help your business to not just survive, but thrive during an impending recession.
Reduce Your Costs
Just like in a wilderness survival situation, only take what you can carry; or rather, trim the fat! Cut expenses immediately. There are certain expenses such as employee training programs and health insurance plans that you should consider retaining. However, things like office equipment, supplies, office catering, utilities, phone systems and membership subscriptions to industry societies or clubs, need to get the axe.
Implement Lean Manufacturing
Become leaner. The Lean system has been steadily evolving for quite some time now. Originating from Japan, it’s a design ethos that cuts waste at every level of production. Move tools and corroborating departments closer. Your manufacturing business needs to cut down on wasted time such as partly finished products being transported to the other side of the facility in order to be completed. Lean task management is where a majority of your focus needs to be. Cut down on the time it takes for projects to be given the green light to head to the next stage. Provide more detail in the briefs and allow employees to work off them, instead of relying on managers all the time.
Manage Your Cash Flow
Don’t stop cash flow. When blood stops going in and out of the heart, we cease to function. Money is the blood of your business, so it must continue to go in and out. Simplify your invoice creation by using a cloud-based system, or, automate the process by using an invoicing software which can generate custom PDF invoices automatically after a purchase. Click and drag templates should make it easier for employees to make invoices for clients already on your database. With the money coming in, you can then pay employee salaries, advertising, and things like rent for your commercial office.
Closely Monitor Your Inventory
Inventory management is going to become a really key issue. In a recession, you never want to have an oversupply by continuing on the same production or in-take trajectory as you normally have. You have to expect sales to dry up or slow down to a trickle. So inform your suppliers of how many products you need on a per weekly or monthly basis. Consumers will change their buying habits and perhaps they no longer go for one product since they want the cheaper one instead. Order or make more of the products that are selling and less of those that have fallen out of favor.
Prepare to Make Some Employees Redundant if Needed
Make the difficult decision to let some people go. Bear in mind that one of, if not the largest expenditure any business has is paying salaries. During a recession, even small businesses will have to cut down on their workforce. If you’re only doing half as much, you’re going to need half as many of your employees. Keep hold of essential employees, but be prepared that if things get bad, you may need to make some employees redundant.
Don’t Sacrifice Marketing Campaigns
Do not cut back on your marketing, whatever you do! Now is the time you need to spread your brand far and wide. Some businesses will be like deer in the headlights, so now is the time to soak into the gaps and utilize every strategy in the book. Invest smartly in Google Ads, SEO, video ads, refreshing your website, landing pages, online forms, creating more blog content.
If you have an email list, now is the time to take advantage of the relationships you’ve already built. If you haven’t started collecting emails, you can’t afford not to start now. Use software like ActiveCampaign to help you generate more leads from your website, and a tool like Outfunnel to automate your emails and synchronize data between your ESP and CRM systems. Be aggressive!
Approach Creditors to Extend the Term of Your Loan
Talk to your creditors. If you need more time to make loan payments, tell them. They’re in the same boat as you are, nobody wants to take our loans when the market is dried up and consumers have closed their wallets. Ask for more time or change the payment amount or schedule.
Consider Exporting Overseas
Contrary to what some might think, it’s also a good time to start getting into the export market. If your domestic economy is suffering more in one particular area, another economy may be the total opposite. So, do your research and due diligence to find prospective overseas clients. Even during recessions, cargo ships and freight trains will keep transporting goods around the world. As a small business, the reduced cost of doing business abroad should be considered. Calculate the costs and perform or hire foreign marketing agencies to provide you with relevant consumer research.
Interact with Customers via Social Media Platforms
Social media is the gift that keeps on giving. However, it’s a very new thing for businesses and as you would expect, it’s easy for some brands to appear tone-deaf. Now is the time to communicate and interact on social media with current and prospective customers. Some of the work is already done for you as users will make content which you can share on your timeline. Consumers will make humorous ‘memes’, satire jokes, images, gifs, and selfie recordings about your brand. If they are beneficial, share, like, and comment. Staying active on social media and maintaining your online presence to retain brand loyalty, boost brand recognition and remain relevant is essential in surviving a recession.
Remain Up to Date on Trends
No business is totally recession-proof. You need to remain incredibly vigilant of the markets, consumer trends, and evaluate financial risks every single day. Whether it’s a short or long recession, your survival depends on your stamina and adaptability. You may need to pivot depending on the current or foreseeable business climate. While it can be hard to forecast the economy, having insights on the market during an economic downturn can inform decisions you make at this time.
Wrapping It Up
As Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Don’t be a deer caught in the headlights when there’s an economic decline, pivot your business during a crisis, and adapt accordingly to current and predicted conditions. It can be daunting to have to implement new practices, let alone having to face an imminent recession; but, your survival depends on it.
Tegan is a Digital Marketer at Paperform, an online form builder. She works with SEO strategies to drive demand and growth and has a passion for content writing for the Paperform blog as well as guest blogs.
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