Whether you run your own business or work for someone else, it can feel like a constant struggle to stay afloat. It’s easy to take some parts of the business for granted when there’s so much going on around us.
According to recent research, nearly 57 percent of small company owners believe the US economy will continue to deteriorate in the coming year. With the economy falling and the jobless rate hovering around 10%, the future does not appear promising. The term “recession” has been bandied around a lot in recent years, which has forced firms to be more resourceful in their cost-cutting efforts.
7 Best Practices to Help Your Business Survive
I’ve compiled a guide on some essential business practices to help you survive any economic downturn.
1. Be Prepared.
If you’re running a business, you’re probably aware of the importance of planning.
Planning can help your business avoid getting stuck in a bad situation if an economic downturn happens.
2. Reassess the Business Plan.
Businesses need to reassess their business plan when they are in a recession. Businesses can survive a recession by making changes to their business plan.
You may have to change your marketing strategy or your pricing structure. You may also have to make changes to your product line or service offerings. Whatever you do, make sure that it is based on solid research and analysis.
If you are willing to make these changes and adapt your business model, then you will be able to survive in the long run.
3. Expand Service Offerings.
If you already have a core product or service, consider adding new services that can be sold along with it — or even as an alternative if necessary. For example, if you sell software, consider offering consulting services for customers who need help implementing it or training, so they’re more productive when using it. Or, if you sell jewelry, offer custom design services so people can create their pieces instead of buying them off-the-rack (which will also help boost sales).
4. Manage Your Cash Flows.
Managing your cash flow during an economic downturn is not always easy. The most important thing to do is to keep your business running and make sure that you have enough money to pay your bills.
Here are some tips that can help you manage your cash flow in these difficult times:
- Keep track of all payments due regularly. This includes invoices from suppliers and employees’ salaries. Ensure you hold sufficient money in your accounts to satisfy these obligations. You can use the free online invoicing software like Free Invoice Generator to create professional-looking invoices for free, which will help you keep track of all payments due regularly.
- Make sure that you pay your suppliers as soon as possible so that they don’t charge interest on late payments or late fees for missed deliveries. If you don’t have enough money in your account to pay all suppliers, prioritize those who charge late payment interest and penalties first because they are likely to be more flexible with their payment terms if they know that you are having difficulties paying them on time due to the economic downturn than those who don’t care about late payments at all (like utilities).
- Get quotes from suppliers for goods and services before accepting their offers.
5. Work on Your Profitability.
When the economy is booming, it’s easy to take full advantage of opportunities. When times are tough, however, you have to be willing to do things differently.
The first step in surviving an economic downturn is developing a plan. Sit down with your team and figure out how much money you need each month to cover expenses and pay your employees. Then think about ways that you can cut costs and still meet your obligations. For example, perhaps you can reduce your rent or hire fewer people for some time until business improves again.
Don’t wait until problems arise before developing a survival plan. Consider how various scenarios might affect your business and what steps you could take in response — even if those scenarios don’t happen right away.
It’s also important not to panic during an economic crisis; although things may seem bleak at first glance, there may be opportunities that weren’t apparent when times were good. If you’re smart about taking advantage of them now while others are being cautious, they could help boost your profits once again when things improve down the road.
6. Explore Bankruptcy.
Bankruptcy is a legal procedure that helps you get rid of debts. It will stop creditors from contacting you and make it easier to qualify for loans in the future. If you have been struggling with debt, it’s time to explore bankruptcy as an option.
You must have a “good faith” reason for filing for bankruptcy. You can only file for bankruptcy if you can prove that you are suffering hardship due to financial problems and that your situation has become so severe that you are having trouble paying your bills.
8. Maintain Communication With Customers and Suppliers.
You may be thinking that there is nothing you can do to prepare for the next economic downturn. You may be wrong. It’s easy to stay informed about what’s happening in your industry, but did you know that you can also keep tabs on the economy as a whole?
To get started, check out BLS.
The Bureau of Labour Statistics (BLS) publishes a monthly report called “Current Employment Statistics” that includes data on unemployment rates, wages, and hours worked. This report helps businesses understand how their competitors are faring in different regions of the country. If your competitors are doing well, it might mean that they’re expanding or have better access to cash than you do. If they’re closing stores or laying off workers, it might be time for you to start looking at ways to save money and cut costs still further.
There are steps you can take to prepare for an economic downturn and make it through without abandoning your business goals or closing your doors forever. Even small businesses can survive a downturn in the economy by staying smart.
It’s inevitable. Now and then, the economy will experience a downturn. When it does, it can be challenging to keep your business afloat. At Citrine Accounting and Taxes, I’m dedicated to helping you stay in business no matter what the economic climate is.