It is no longer news that we are slowly inching toward a recession; to some, we are already in the middle of one.
Studies from the recessions of 1980, 1990, and 2000 reveal that 17% of the 4,700 public companies understudied were hit hard; some went private, went bankrupt, or were acquired. However, further studies showed that 9% of the companies flourished three years after the recession and outperformed competitors by at least 10% in profits growth and sales.
This shows that, Yes, a recession is detrimental to the growth of any business, but it could also scale through and flourish when the economy stabilizes. The question becomes
“How can you make your business recession-proof?”
Read on as we share some tips that could help.
Don’t Pause your business
One standard indicator of recession is how the economy goes into a lull. As a result, businesses may fall into the trap of emulating this lull, slowing down their operations. Don’t wait out the lull. Instead, reacquaint yourself with your core business strategies and keep at it despite the economy. The keyword is “Don’t Pause.”
Protect your cashflow
Profit margins definitely get slimmer during recessions, but the truth is, no matter how little, if the profit stream dries up, that could signify the end of the business. So plan ahead and find ways to cushion the effect on your cash flow. Here are three hacks:
- Cut back on unnecessary spending.
- Get financial assistance when and where possible (loans, grants, e.t.c)
- Identify your major income stream and double down on it.
Keep Existing Customers Closer
During a recession, purses get clamped shut, and people may be uneager to try new products, so it becomes challenging to get new customers, except maybe you sell a “recession-relief pack”. Build genuine relationships with customers. Whatever connection you build will turn them into loyalists even during hard times. If you don’t know where to start, start by making your brand more human. Customer care/relations team, over to you.
In navigating a recession, businesses who stay afloat have been proven to know the ins and outs of their model; to the extent that plans were made in anticipation of an economic downturn. However, like the popular saying, “it’s never too late to start”, so start with the three steps above and keep going.
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