10 Useful Strategies to Survive a Recession
Most people are starting to realise that in an economy as ruthless as this one, you will need to adapt your approach to business in order to pull through.
During such times, the default behaviour is to panic. Panic, which is fear-driven and not based on fact but on emotion, has tremendous power – the power to change the direction of business. But do you want to give in to panic, throw your hands in the air and accept self-destruction, actually accelerating it and becoming a part of the panic?
There’s an alternative to panicking. We are confronting change, and change is an opportunity for progress. You have the choice to take advantage of change or allow yourself to be buried by it.
Make the right choices today and see the results tomorrow. It’s not just about adjusting prices — you need to broadcast your differences, tell people why they should shop with you, provide them with added value, and not discounts and watch your business thrive in a down market.
Here are 10 rules of engagement that will help you successfully position your business and succeed in the new economy:
- Evaluate and eliminate excessive debt. If your sales numbers have dropped, you may not be able to service the debt you took on when your revenues were much higher. Any debt can be reduced, settled or at the very least renegotiated – the key question is are you willing to act?
- Keep a close eye on your reserves. The age-old advice of keeping 6 months of expenses in a reserve pool for uncertain times has not lost its relevance. Ignore this truth at your own peril, times such as these highlight it. When reserves are not sufficiently high, most often the next unavoidable step when cash runs dry is sale of assets- always extremely uncomfortable, often wasteful and obviously distressing.
- Track your finances daily — and start today. Install a key indicator system to track your business and production daily, weekly and monthly. Follow profitability per job, per week, per client, per product. Use these indicators to focus on your most profitable products or services. Don’t engage in activities that are unprofitable.
- Reduce inventories and overhead at any cost. If you are in a trading business, look for items that do not move or turn frequently. That’s where your cash is locked up — in your cost of materials, labour and so on, waiting to be turned into cash after it’s sold and the money collected. This can result in a huge cash drain.
- Invest in yourself and your staff. Improve knowledge and skills, invest in new technology and then broadcast it as part of your marketing activities. The herd follows those that continue to invest and take positive steps even in the worst economic climate. Be a leader and refuse to shrink back.
- Don’t take your eyes off your clients. The temptation during uncertain times is often to withdraw from or interact less frequently with clients, when in fact the opposite is necessary. Clients will remember you as the person who was there to support in the good and bad times….and from client interaction come business opportunities and new orders – an undeniable fact.
- Resist profit-eating sales and discounting. Don’t give away your product; instead, compete with service, quality and uniqueness. Create a niche and have a competitive advantage.
- Expand your client base if possible. Marketing can take you anywhere, especially if you can create an expertise or a niche item or service. Find what you do that is unique and do it as large as possible.
- Manage effectively. This means tracking and analyzing key indicators, financial reports and productivity. Perhaps get smaller first by cutting out unprofitable clients – this move will eventually result in more profit.
- Focus on quality. Whether you offer a service or a product, quality delivery and flawless execution wins in the long run. Never forsake this principle.
The horse has bolted, but there is still time to close the door…quickly. Get better, get smarter or be forced into a corner. It’s your choice.
Hampshire Independent Advisors