Whenever experts forecast that an economy is moving into recession, it usually causes panic for both individuals and companies. Organizations review budgets, cut down on expenses, and sometimes revise short and long-term plans. While these are important steps, knowing where to apply those cuts is important to save the organization from the adverse effects of a recession.
As an entrepreneur, you may become troubled about your cash flow, overhead costs, salaries and how your projected growth figures will be achieved. You can easily be consumed by these thoughts however, you can adopt the following measures to stay afloat during an economic crisis:
- Be Flexible: A review of existing relationships will offer insight on the possibilities of entering into longer contracts with repeat customers. To avoid sinking during economic turmoil, you must be competitive with your prices, flexible with payment plans and offer long-term engagements. Additionally, you can give incentives for early payments, create a rewards program and build a referral system that offers value (or discounts) to customers who recommend your products or services to others.
- Offer Excellent Customer Service: In a bad economy, there is reduced purchasing power and buyers tend to be more selective with their spending. This means that your customer base may become more demanding, especially when your product or service is not a necessity. Avoid looking down on your customers regardless of their class and be willing to go the extra mile for them. Show empathy when customers request for discounts, and politely decline if you cannot afford to offer price cuts. Bad customer service can easily put a company out of business during a time of recession. It is important to provide excellent customer service to retain your existing customers and also expand your customer base due to positive reviews, as word-of-mouth remains the most effective form of advertising.
- Reduce Waste: During turbulent times, many companies tend to reduce their marketing budget and this usually has an adverse effect on sales. Rather than reducing your marketing budget or any other budget crucial to the success of your business, consider cutting down on other operational expenses that your company can do without. You can cut down expenses by using more soft copies of documents, printing less paper, holding off on expensive business trips, utilizing staff for multiple job functions rather than new hires, etc.
- Utilize Free Resources: Hiring top business consultants at such critical times is detrimental to a company’s budget. With the internet, you can access useful tools and resources that you can easily implement in your business without the help of a business consultant. As an entrepreneur, you must make it a habit to read on materials that apply to your industry. This will help you effectively benchmark against competition, and apply best industry practices in running your business. You can also seek for free mentorship programs from industry experts and access other free resources in startup hubs located in your community.
- Network: Networking is key during hard times to establish new connections, get business leads and increase your awareness of new business opportunities. By networking, you can gain insight to the latest developments in your industry as they occur.
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