7 Tips To Help Your Business Shine In Recession!
A recession is like a terrible storm – no matter what we do, we just can’t avoid it. Even those businesses that have a strong industry are likely to suffer. Every business is going to feel the sting of recession once it hits. Think of it as a domino effect – if one business falls, so will the others next to it.
This awful period lasts about two successive quarters (1 quarter = 3 months). If it sinks in completely, the effects could last up to 5 years or more. Just so you don’t bear the biggest brunt of this period, do follow the given strategies that will help you tackle this.
- Cut Out the Unnecessary Costs
Sales are the ones that are going to be taking the biggest hits at this time. This is where you need to think about making some serious cuts in costs. Look back at the service agreements with your vendors. Cut back on the bank fees, repair vehicles and equipment and buy only a limited number of supplies.
Review your inventory spreadsheets to see which items are selling slowly and which of them are not. You can put some of them on discount until they start to sell.
- Try to Eliminate Heavy Debts
With your revenues taking a dive, it will be even tougher to cancel out those debts now. You have to rub out some of the debts to make it more manageable. Some of them include; lines of credit, mortgages, secured debt and leases.
- Hedge Your Raw Materials
Look towards company derivatives in order to hedge raw materials so you can get better supplies. To be frank, company derivatives are contracts that get their value from price movements of assets that don’t perform well. With this move, you can hedge the prices of oil, metal, coal, gas and electricity.
The recession will be kinder to you if you are a supplier or a producer of these materials. It will push down prices and bring in contracts that lock on with your sales price. A buyer of a futures contract will benefit from an increase in the price of an underlying product.
- Safeguard Your Cash Flow
Your business cannot function without cash flow. It is like the blood of which your company stands on. Cash needs to keep flowing. But it’s a good thing that cash flow won’t be a problem no matter how rough times can get. You can still make good sales if you do good business. But that doesn’t mean that you shouldn’t keep cash flowing even in hard times.
- Keep Track Of Your Finances
Stay ahead of your finances by installing a key indicator system. This will keep track of your business on a daily basis and prepare monthly financial reports. Be sure to follow profitability for each job, client, week and product. If you can focus on these indicators, you will know which among these the most profitable products are.
- Recession-Proof Your Business
If you are running a business in retail, then you can get the most of it by selling items on consignment or adding bargain bins. And if it is business or consulting services that you run, you should really consider putting a recession-proof package for your consumers.
- Create Good Strategies To Attract Customers
Small businesses are usually at a disadvantage when it comes to sales. But if your sales pitch is right and the business is stellar, you can reel in some hungry customers in no time. But it won’t happen overnight. You can’t do something that your rivals are already doing. Think about offering something else to your audience that your competition can’t.
Do some more research about your competition so you can have a better idea about your game.
Follow each and every one of these steps and be prepared to reap the fruits of your hard labor soon.
Jennifer Martina works as a Financial Analyst for Dissertation Writing Service Firm. She is quite fond of the blogging world and spends her time writing on financial aspects of running a business. In her blogs, you will find interesting articles on financial management and business management.