Are you worried about the future of your company during these uncertain times? The global economy has been under pressure since the start of the COVID-19 pandemic, and things aren’t looking good. Many experts believe that the next recession will hit this year. This means that businesses should start preparing now.
Recessions are tough periods for companies. They usually result in lower sales, fewer customers, and less profit. In order to survive, companies need to adapt to changing circumstances. Here are some steps to take to protect your business during a recession.
Improve Your Business’s Portfolio
One of the best strategies to weather a recession is to be more cash positive. Here are three ways to improve your business’s portfolio to be better prepared and stay more liquid during a recession:
- Asset Diversification – If you’re investing in stocks, bonds, real estate, commodities, or even cryptocurrencies like Bitcoin, you want to make sure that you’re spreading out risk across multiple asset classes. This helps reduce volatility, making it less likely that one type of investment will crash while another rises.
- Long Investment Timeline – Investing over a longer timeframe allows you to avoid short-term fluctuations in the markets. Instead, you’ll see steady growth in your wealth.
- Rebalance Every 3 Years – Rebalancing your investment portfolio every few years ensures that you keep an eye on what’s working and what isn’t. By doing so, you can maximize returns without risking too much capital.
Pay as You Go
Businesses are often very good at tying up credit card debt into long term loans, but what about short-term debts? Business owners need to start thinking about how much cash they have tied up in things like advertising, marketing, and even office supplies.
The problem is that many businesses don’t know where their cash goes, or how it relates to the revenue they generate. So, rather than taking out a loan, why not just use some of that cash to cover the costs associated with running the business? This way, you’ll be able to see exactly how much money you need to spend each month and make sure that you’re spending it on the right things.
Cut Back on Expenses
If you’ve already cut back on expenses, there’s no reason to stop now. But if you haven’t yet started cutting back, here are three reasons why you should do so immediately:
- Reduce Costs – One of the easiest ways to save money is by reducing overhead costs. For example, you could cut down on office supplies, travel expenses, and other unnecessary costs.
- Increase Efficiency – When you increase efficiency, you can get more work done with fewer resources. For example, you might consider outsourcing certain tasks instead of hiring additional staff.
- Increase Profits – Finally, you can also increase profits by increasing productivity. For example, you can automate processes, streamline operations, and implement new technology to help you run your business more efficiently.
Invest in Marketing During a Recession
When times are tough, people look for ways to cut costs. But investing in your brand doesn’t just mean spending more money on advertising. You must also consider how you promote your products and services.
Invest in Marketing
In today’s economy, it’s easy to feel like advertising isn’t working anymore. But there are things you can do to promote your small business without spending too much money. Social media platforms such as Facebook, Twitter, LinkedIn, Pinterest, Instagram, and Snapchat are great places to market your brand. They provide a lot of opportunities for businesses to interact with potential clients and generate leads.
Lead by Example
Great leaders start by leading by example. A good leader inspires others to follow him or her. When we are inspired, we want to go above and beyond our normal duties. We want to give 110% because we believe in something bigger than ourselves.
A great leader leads by showing his or her employees what is possible. If there is a problem, he or she takes responsibility for fixing it. He or she does not wait for someone else to take action. Instead, he or she gets involved and tries to fix things himself or herself. This gives everyone around him or her permission to try harder, too.
If a leader wants to inspire his or her team to work harder, he or she needs to lead by example. Be willing to sacrifice some of your salary or benefits. Show your employees that you care about them. You might even consider working extra hours. Your example will motivate your employees to do likewise.
Recession Scenario Planning
Scenario planning is one of the most effective ways to prepare for uncertainty. In fact, it’s the process of creating multiple scenarios that helps companies make decisions and take action while considering potential outcomes.
The three main scenarios to plan are the original plan, the likely plan, and the worst-case scenario. This allows leaders to gain insight into how things might change and to develop strategies accordingly.
As a business leader, working through each of these scenarios can help bring forth thought-driven data to guide decision-making. And, since many businesses don’t know where to start when it comes to financial modeling and scenario planning, we’ve compiled some resources to help get you moving.
Communicate With Your Vendors
The coronavirus pandemic has changed everything. In fact, it could change the very nature of what we consider normal forever. But even though the world is changing rapidly, one thing hasn’t – the importance of communicating with your vendors. You must communicate with your vendors because without them, you won’t survive.
If you run a small business, chances are good that you work with several different companies. These include suppliers, distributors, manufacturers, retailers, and others. Without proper communication, you risk losing money, missing deadlines, and running into problems.
Communication isn’t just important for small businesses; it’s critical for large corporations, too. Imagine if you ran a huge corporation like Apple, Amazon, Facebook, or Netflix. How much easier would it be to keep track of everyone involved if you had instant messaging systems, video conferencing tools, and other communications platforms?
Beat Out the Competition
The economy isn’t getting better anytime soon, but it doesn’t mean that everyone in your industry is going to suffer. If you want to see continued growth, make sure that your company is the one riding out the storm.
To gain a lead on your competitors, you will first need to find out what they are doing. This is where researching your competition comes into play. Knowing what your competition is doing can give you insight into ways to improve your marketing strategy. Are they performing better than you in certain areas? How can you take advantage of this information?
Automated software can help you do some of the heavy lifting here. By tracking key metrics such as traffic, conversions, and customer satisfaction, you can quickly identify areas where you could use improvement.
Talk To Your Business Banker
Financial institutions often view businesses differently based on industry. While some banks don’t care about small businesses, others do. And while some financial institutions see themselves as a place where entrepreneurs go to find capital, others believe it’s a safe haven for investors. In either case, it’s important to know what type of banking relationship you have now and what types of changes could occur in the future.
The first thing you’ll want to do is talk to your banker and set up a meeting. This way, you can discuss what’s happening in your particular situation and ask questions such as:
- How much money does my company have access to?
- What kinds of loans are we looking at?
- Are there any loan programs I should consider?
You’ll also want to ask about upcoming events that impact your business. For example, if interest rates rise, you may want to start thinking about refinancing your mortgage. If your industry is under threat, you may want to look into restructuring your debt. These are just a few examples of things you should ask about.
Asking questions like these will show your bankers that you’re aware of what’s happening around you and that you’re willing to take action. They’ll appreciate that you’ve taken initiative and are proactive about your business.
Prioritize Customer Service During a Recession
Some experts predict that we could see another economic downturn within the next few months. This doesn’t mean that business owners should stop investing in marketing and advertising, but rather, it means that they must prioritize customer service above everything else.
Businesses that put customer service at the forefront of their strategy will find themselves thriving during tough times. Remember, it takes repeat purchases to keep a business afloat. When consumers feel valued by your brand, they’ll return again and again. While it might cost you extra money upfront, it will save you money down the road in customer acquisition costs.
Consider Hiring an Answering Service to Reduce Staff Costs and Improve Customer Service During a Recession
If you are looking to cut costs during uncertain times, consider hiring an answering service. This can be done by outsourcing your call center or customer support operations to a third-party provider. By doing this, you can reduce staff costs while improving customer service.
If you’re ready to get started with a professional answering service, we’re here to help. Contact Answer Aide by calling (866) 427-3500 or by filling out our online form. We’re happy to partner with you to support your business while it grows.