A recession can happen at any time. Every business needs a strategy to weather the storm. A recession is part of the economic cycle of every country, and we can only delay it but never deny it. A recession means that there is a liquidity crunch in the economy, and this affects every business.
During a recession, most business owners focus on lay-offs to help protect cash flow. However, this can be detrimental to the company in the long run. Instead, there are a few time-proven techniques that can help small businesses survive recessions without compromising on their humanitarian values. Among other strategies, an online Business loan can help you stay afloat.
In this article, we’ll cover five strategies that you should consider.
1. Focus on Existing Clients or Customers
Your clients (or customers) are the lifeblood of your business. Without them, your business would not survive till the next month. While onboarding new clients can be expensive and time-consuming, you should focus on retaining your existing clients which can be more cost-effective.
There are certain tips that you can use to ensure that your clients do not stop providing business when you need them the most:
• Remain in touch with them through email or SMS marketing.
• Offer them loyalty discounts or points for being valued clients.
• Personally get in touch with them and ask for feedback.
• Ensure that their needs are being taken care of. This includes customer support, timely deliverables, and quality service.
If your existing clients have good things to say about you, you’ll be onboarding new clients in no time (thanks to word of mouth) and you may even get a Business Loan for small businesses on better terms.
2. Reduce Overheads
Cash flow is king. You need to ensure that the money that is going out from your business is less than the money that is coming in. If your business is running at a loss, then it may only be a matter of time before you go out of business.
Some of the ways you can reduce the overhead of your business are:
• Take a salary cut yourself, in order to set an example.
• Consider relocating to a cost-effective office space.
• Talk to your employees about reducing expenses and brainstorm ways to reduce overhead.
• Stop any excessive and low-priority expenditures such as top-of-the-line software or an expensive coffee machine.
Every small business’s expenditure profile is unique, so this is just an indicative list. It will surprise you to know where your savings can come from and how far they can go. These savings can even help you pay for your Business Loan for small businesses.
3. Don’t Stop Marketing
While it is always preferable to cater well to an existing client before chasing new clients, you mustn’t stop looking for more business. Seeds that you sow today, can bear fruits later when your business might need them even more.
You should invest in a lead generation mechanism that has worked for you in the past. This can be SEO or paid advertising or social media or several others, depending on the nature of your business.
The rule of thumb is that marketing should be a priority even during a recession. This is because marketing is where you get clients and in turn generate more income for your business. However, make sure that the return on investment on your marketing efforts is a net positive. You can even take an online Business Loan to fund your marketing efforts.
4. Use Technology Wherever Possible
Digital transformation is coming for every business. A business that does not evolve is more likely to fail. You should invest in the latest techniques and technology to improve the productivity of your company.
For example, you may consider becoming a remote-only company. There are several advantages to becoming a remote-only company but the main one is that you can save a lot of money on office space. You can ask all your employees to work from home (except those that need to be on-site).
If you have a remote-only company, then you don’t need to pay monthly rent for your office space, no electricity cost, and no lunch cost. Your employees can also save time and money on their commute, which can lead to higher productivity.
Similarly, there are other ways in which technology can help a small business:
• Use Zoom and Slack to stay connected.
• Using free software like Google Docs and Google Sheets.
• Using a common cloud storage platform for easy access to data.
• Using CRM software like Salesforce.
As always, this is an indicative list. You should research which software tools can help your business the most and increase productivity.
5. Look for Financing Before It’s Required
As mentioned earlier, cash flow is king. If your cash flow is depleting every month, then your business may be feeling the effects of a recession. You should talk to your bank or lending institution and consider a financing option before you desperately need it.
This is because it is usually harder and more costly to finance your business if it is already in trouble. If you can foresee that your business is going to be in trouble in a few months, then the time to act is now. You can secure lending at cheaper rates with lower collateral if the balance sheet of your business is in a better condition.
Poonawalla Fincorp is one such lending institution that understands your needs and can help you get your first online Business Loan with minimal hassle.
A recession can be tough on a small business, this is why small business owners need to be extra careful. If you think that your business may be in trouble, then you should apply for your Business Loan for small businesses today. A small business does not have the resources of a large company that could stay afloat for much longer during troubled times.
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