When the economy is floundering, it feels like there's nothing your business can do. Everything's going against you, and the news is always full of negativity. To make matters worse, you see fellow business owners closing their doors and filing for bankruptcy! It can be a very stressful situation, and it's sadly the reality for lots of people in 2020. Recent economic reports suggest we're experiencing a bigger downturn since the global financial crisis over a decade ago. That crisis rocked the world, but the good news is that we did bounce back from it. That's the key thing to keep in mind when the economy is degrading – history suggests that there will be an upturn at some point.
Still, most small businesses can't afford to sit around and wait for the economy to bounce back. It doesn't matter if things start getting better a year from now – your business may already have been forced to close! So, what can you do to help your company in the middle of an economic downturn? A few suggestions pop to mind, and here are the best ones:
Become a leaner business
A lean business is one that's stripped down as bare as possible. In essence, you do everything you can to reduce your ongoing expenses. If you have constant things to pay for, but a lack of income due to the economic downturn, you'll always end up going bankrupt. Now is the time to make some big decisions and trim the fat, so to speak.
Look at your company and consider where you could save money here and there. Sadly, this might mean letting some of your employees go – or switching them to part-time contracts. It's not an ideal situation for anyone, but you have to do what you can to survive. Obviously, look at other ways you can trim costs before resorting to redundancies. For instance, you can save loads of money by working from home instead of renting an office.
Try to maintain a steady cash flow
The businesses that survive economic busts are ones that maintain a steady flow of cash through the business. This was touched upon in the previous point as the chances are you will see your sales dry up. Why does this happen? It's simply due to a lack of demand for businesses and products during a recession. Consumers have less money – or need to be smarter with their money – so they spend less. In turn, your money dries up as fewer people want to make purchases.
However, you can still bring money into your business through different avenues. You have to explore other ways for your company to make money; start considering secondary income sources. One simple example is to start a blog and get adverts on your site. This helps you make a little bit of extra money on the side to keep the cash flowing. You could also think about pivoting your business and creating new offerings to reel in more customers. It's not easy to generate customers during an economic downturn, but you can still do it!
Move your business online
The following point relates to both of the previous ones mentioned above. Moving your business online is far more cost-effective than running it from a physical store or office building. Look at places like Hosting.co.uk, and you'll see how cheap it is to host a website online. The costs are far less than paying for an office, which reduces your expenses. This also gives you a platform to make more money via a blog or online offerings, addressing the point about improving your cash flow.
Furthermore, there's a financial benefit to moving a business online. It allows you to provide your products/services at a lower price. Why? Well, think about what you just read; it's cheaper to run an online business than a physical one. The lower operating costs means that it costs less to provide your products/service. Therefore, you have more wiggle room for profits; you can sell things for less money but still make a considerable profit.
Consider this: how many online businesses have folded during a recession? More often than not, it's the traditional businesses that struggle during this time. Being online opens you up to more customers, helps you save money, and provides new ways to pivot and bring in more money.
Be ruthless
Some of you may find this harsh, but you have to be ruthless when the economy is in the mud. All of your competitors are going through tough times, so you should take advantage of this to draw customers away from them. Research your rivals to figure out what you can do to make your business more attractive than them. You should be doing this anyway, but it takes on more significance when times are tough. They may lack the resources to try and fight back, allowing you to siphon off customers from your biggest rivals.
Essentially, you become the dominant force in your competitive market. Everyone will come to you because you're better than them. Therefore, you can make more money as you get more customers. It's not going to be the easiest thing in the world, and some would argue there's a significant risk. What if you fail to draw customers away from your rivals? The best way to look at it is that your opponents will just take all of your customers if you do nothing. So, you'll be left in the dirt anyway! You may as well try everything you can to dominate your market.
The underlying theme is that your business should keep ticking over during an economic bust. The worst approach is to do nothing. It's easy to feel like you can't do anything, and that your best idea is to sit back and wait for the economy to bounce back. This will usually result in your business falling behind everyone else and struggling to survive. You don't want to be one of the many business owners that liquidate their company; follow these tips to survive!
