By: First Union | Date:
5 Tips to Help Your Business Survive an Economic Downturn
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Most experts agree that the economy is going to take a hit this year, potentially even bigger than it already has. It could shrink by as much as three percent over the coming months. Despite the grim prognosis, this could be a great chance for some companies to strategize in new ways and thus make their business even more profitable. It's about knowing where your company stands currently and understanding how to move forward embracing those opportunities that will help you survive and possibly even grow.
Staying Ahead of the Curve
During the Great Recession of 2008, almost ninety percent of companies shrunk; it is thus key to plan ahead and not let your business become a part of that statistic.
Look at the big picture. Before the pandemic, many businesses were actively engaged in major transactions, mergers, and sales. In light of the coronavirus, much of that came to a standstill; now, however, it is critical to think long term, look at the big picture, and don't be afraid to move forward regarding certain projects.
Take some risks. Hand in hand with forging ahead is the capacity and willingness to take a few risks. That said, you want to carefully measure the risks that you do take. Perhaps, for instance, acquiring a competitor right now might not be the most sound strategy. Whereas, you might think about developing new segments for your products or even shifting your business model a bit to suit a post-pandemic climate. Take risks but also be sure to manage suck risks carefully.
Get the capital you need now. Not having adequate funds right now is an issue for many. As things begin to reopen, business is bound to pick up, but one thing you don't want to be without is some form of cash reserves. Now is a terrific time to apply for a line of credit or short term loans for example. These may help you survive the next couple of months until your company is operating at normal capacity.
Increase cash flow. Handling an economic downturn means having cash on hand to do so. One thing you need to do now is to collect the money owed to you. Don't let customers stretch their payments out endlessly; this is only hurting you. You also may want to revisit your inventory—are there areas you can cut and reduce working inventory? Identify where the wasteful expenditures are and get rid of them. Now might be the time to try and renegotiate with suppliers and vendors as well.
Act on opportunities. There are some inherent opportunities for downturns. For instance: hiring new employees willing to work right now at a bargain rate. Additionally, this could be a good time to look for deals on materials and services. Suppliers are also hurting for money in some cases; you could strike a deal that serves you both well. Bargains are bound to be found in all areas. Real estate for one. You could potentially pick up large assets at a fraction of what you normally would.