Given the situation of the economy right now, a recession may hit soon, which would make things much more challenging for small company owners.
Due to this, we have asked our contributor network, which consists of company owners, professionals, advisers, and entrepreneurs to provide the best advice they have for enhancing small businesses’ ability to withstand economic downturns. Their replies are listed here, with no preference given to one over the other.
Taking Charge of Your Cash Flow
Josh Thill, Founder of THRIVE ENGINE, explains:
“One of the most crucial things you can do to safeguard your small business from the consequences of a recession is to take control of your company’s cash flow.
This means that you need to work toward the objective of making sure that your incoming revenue is enough to meet your present expenditures while also saving money in case of an unforeseen need.
For instance, you can realize that you need to find new revenue-generating strategies, like expanding into new markets or offering more services.
Additionally, you might need to cut back on unnecessary spending and take a more strategic approach to price and your total budget.”
Raising the Value You Receive from Each Customer
Matt Janaway, CEO of Matt Janaway, says:
“By building sincere relationships with them and seeing to it that their requirements are addressed, you should take care of the customers you currently have.
As a consequence, your client’s lifetime value will increase, which is a good sign for your business’s potential long-term profitability and success.
A high customer lifetime value (CLV) is a sign of brand loyalty and the likelihood that you will continue to get recurring revenue from your current clients even during a downturn in the economy.
They won’t just continue to shop from you; they’ll also spread the good word about your company to their friends and relatives.”
Maintaining Your Strategic Alliances
Michael Lees, Chief Marketing Officer at EZLease, tells us:
“One can gain access to new customers, markets, and ideas by forming strategic relationships.
Opportunities for partnerships may be discovered through a powerful individual or another business.
Two other types of corporate collaborations that can be established with other firms are mergers and acquisitions.
The fact that 10% of small businesses survived the Great Recession with the aid of strategic alliances is a highly persuasive illustration.
The two most crucial elements in the process of creating these alliances, in my opinion, are choosing partners who share the necessary underlying views and establishing sincere relationships.”
Strategic and Tactical Sales and Marketing
Daniel Foley, Marketing Manager at Perspective Pictures, says:
“Many small businesses make the error of halting all of their marketing activities during economic downturns.
However, the near-term cost savings come at the expense of creating a strong lead and sales funnel in the long run.
When rivals cut back on expenditure, continuing your sales and marketing operations may also help you gain market share. For this reason, you should continue these operations.
Instead of opting to stop all of your marketing activities, look at your budget to determine where you are receiving the most return on investment.”
Enhancing the Number of Repeat Customers
Don Evans, CEO of Crewe Foundation, explains:
“It should go without saying that a company should try to offer its clients great service since the degree of satisfaction that a company’s customers report is the single most critical factor in determining that firm’s level of profitability.
No matter what obstacles you encounter, your business will always be future-proof as long as your clients have a strong connection to the services you offer and keep using you.
Making this a reality, though, requires a close examination of your current customer retention strategies to identify room for development.”
Keep a Flexible and Slender Mindset
Shakzod Khabibov, Co-Founder of Natura Market, tells us:
“If you want your firm to withstand the present economic crisis, you must keep a flexible mindset.
Avoid letting your ego or tradition bind you to outdated plans, especially if your ability to quickly pivot might provide you an edge against organizations that move more slowly.
Additionally, make an effort to obtain flexibility from your suppliers and consumers. Renegotiating contracts to incorporate more beneficial clauses that can improve cash flow is a good idea.
Throw out any unneeded luxuries, such as outdated instruments, that may have made sense in earlier, more wealthy times but are no longer necessary for a corporation to operate effectively.”
Invest in Creating Stable Relationships
Inga Broerman, VP of Marketing at BluLogix, explains:
“Relationships become even more important during periods of economic uncertainty.
It will be much easier for you to delay a rent payment or prolong the period over which you pay a vendor if you have built trustworthy relationships with your landlord and your vendors.
Make an effort to get to know the individuals you can ask for help from before you need it. Developing deep relationships with your customers is essential for company success.
Making relationships now will help you keep them when things are hard later. People ultimately work with businesses that they are familiar with and confident in.”
Maintain a Positive Standing with Creditors
Mathew Bowley, Marketing Manager at Solmar Villas, says:
“If there is any way to prevent it, avoid delaying your payments to your creditors.
You may think delaying payments to your creditors would leave you with more money in the bank.
On the other hand, using this strategy could not work if you only have a restricted quantity of money.
Maintaining good ties with your creditors and fulfilling your financial commitments on the schedule are both in your best interest.
If you have a history of paying your debts on time, you will find it simpler to bargain better terms with your creditors if you ever find yourself in a tight financial situation.”
A small business’s entire focus and resources should be put toward building a loyal customer base.
To be ready for a recession, they should devote the upcoming months to going above and beyond for their clients, building relationships, and ensuring they have repeat business.
Businesses may do this by developing a personal relationship with their clients and, if necessary, helping their customers make payment arrangements if they need financial support.
Businesses can retain their existing levels of profitability if they take these precautions, even if the anticipated economic slump occurs.