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.
Wrapping Up
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.