Six Top Strategies to Help Small Businesses Survive a Recession
A recession is a frightening time for any business. It is especially more concerning for small businesses that may lack the financial buffer that the major corporations have. That is why it is critical to create a plan for a recession-proof business today. In this post, we look at six strategies to help small businesses survive a recession.
While a downturn can be a depressing moment for the business, it does not always indicate the end of a company. It could also be an opportunity to identify flaws in your company strategy and develop a stronger one.
According to the Harvard Business Revenue study outcome, three-quarters of U.S. public firms with annual sales of $50 million and above had decreased revenue throughout the past four recession periods. However, 14% experienced faster revenue growth and higher profitability.
But, to be on the safer side, here are six strategies to help small businesses survive a recession:
1. Improve Your Cash Flow
Profit margins shrink during recessions, making it hard to maintain a stable cash flow. If your cash flow runs out, your business is likely to fail. Surviving a recession requires you to plan ahead for measures to buffer your financial flow. Here are a few possibilities:
- Reduce unnecessary spending: Examine your present expenditures. See if there are any resources, subscriptions, or services that your business can do without to spare money for critical issues in the company.
- Make financial arrangements: Apply for loans and grants to help you stay afloat.
- Renegotiate vendor contracts to include more feasible conditions: You can ask your retailers to modify the contract terms. See if they are willing to provide flexible payment terms during the economic downturn.
2. Invest in Your Current Customers
It is more expensive to acquire new clients than to keep the existing ones. That applies even when things are normal. During an economic downturn, most people reduce their purchasing, making it more difficult to convince new customers to buy your products or services.
As a result, investing in your existing customers becomes more vital. You must develop genuine relationships with your clients and demonstrate that you have their back. Respect them and show your appreciation for their patronage through your conduct.
3. Improve Employee Skills
In recession times, your team is critical in helping your organization pivot, stay flexible, and think imaginatively. Your staff must be prepared to tackle the recession difficulties. Cross-training and building employee skills can assist attain this goal. Investing in your workers makes them truly feel a part of the team, hence increasing their willingness to go the extra mile.
4. Focus on Core Competencies
Obviously, there is something that your business is exceptionally skilled at. That’s most likely your company’s leading service or product, and it’s what will see it through a downturn. Surviving a recession means focusing on the products and services that work best for you and avoiding wasting money supporting weaker ones.
And, if at all feasible, develop ways to generate various revenue streams by advertising your main products or services. You can also potentially boost your revenue by offering economy and VIP options of what you already provide.
5. Review Your Inventory Management
Check to see if there is a way to lower the inventory cost without inconveniencing your clients or reducing the quality of your products. Perhaps you are ordering too much of a particular item, or you can find the items at a lower cost elsewhere. Find out about a drop shipping option that you could use to save money on shipping or warehousing. You can change how you do things to remain stable during a recession.
6. Review Your Marketing Strategies
Marketing is also one of the vital strategies to help small businesses survive a recession. Reviewing your marketing strategies enables you to generate fresh ideas for increasing sales and finding better methods to spend your marketing budget. Your distinct selling proposition is critical for you to outdo your competitors. In addition, it is essential to design ways to measure the efficacy of your marketing.
Step up your marketing campaign by:
- Following up on customers who ghosted you
- Sending frequent content-rich emails to your current mailing list subscribers
- Checking in with previous clients you haven’t been in communication with for a while and creating persuasive offers to get them back.
- Conducting sales, and social contests, holding events and posting on social media.
Making your small business 100% recession-proof may not be possible. But, using these six strategies will help your firm stay and make profits during difficult times. It starts by examining how you currently do things and searching for ways to improve. We at AMB Performance Group are committed to helping you understand your business performance and giving you the knowledge for a sustainable operation.
Contact us to get started with our business health check today!