It may seem strange to think about expanding your business during a recession, but there are actually many things you can do to keep your business healthy and open to many opportunities that you might not have in good times. Now is the time to focus on improvements. We can look back on previous recessions and learn some lessons. Here are some things that have worked in the past:
1. Tighten your control over your finances.
In good times, it’s all too easy to be careless with your finances, and there are usually many areas for improvement. Here are some ideas:
Ensure your accounting is accurate and properly audited to avoid any mismanagement.
Be prompt in collecting payments, preferably in advance.
Don’t store underperforming assets or slow-moving inventory.
Review large expenses and cut back where they’re not hurting the business.
Buy in bulk to save on shipping costs or achieve cost savings.
2. Maintain a good cash position.
It’s important to have a stable cash position throughout the downturn of a recession. This means the company can cover its liabilities with a mix of cash and liquid assets. Having a stable cash position puts the company in a good position when dealing with suppliers and bankers.
3. It’s a good time for acquisitions.
While it may seem counterintuitive, there are many undervalued assets during a recession, and these can be transformed into strong cash flow if chosen wisely and with the right plan. Keep your eyes open and have a purpose. And you can grow your business in a recession.
4. Get long-term deals with good rates.
In a recession, people may be desperate for a deal, so this is the time to negotiate long-term agreements below market value. This could be anything from property rent to your phone system or insurance. It’s also a good time to make long-term agreements with vendors.
5. Assess the market value of your products.
Customer needs can change during a recession. Make sure your product meets those needs. Consider how you can add more perceived value to your product to adapt to the times. There may be ways to bundle products that make the product more appealing, and don’t forget to ensure you’re retaining existing customers. Attracting new customers requires significantly more expense.
6. Don’t cut back on marketing.
While it’s tempting to cut costs, marketing isn’t the place to do it. Now is the time to use your marketing to build a strong brand and stay on top. Also, keep an eye out for customers from companies that are closing and have a strategy for capturing them.
7. Expand your distribution.
During a recession, people are looking for more business, so now is the opportunity to find new distribution channels. You might be able to get a better deal with your existing channel or replace it with something better.
8. Protect the heart of the business.
If you need to make cuts, make sure you don’t touch the core of the business. Assess what’s at the core of the business and continue investing in it, as that’s where growth needs to happen. You may need to reduce other areas or outsource them.
9. Take care of your employees.
A positive work environment and employee support will keep employees loyal. Maintain open communication and allow employees to be involved in decision-making when appropriate. Relaxed periods can be used for training and planning sales and marketing strategies.
10. Have a goal and keep working towards it.
Without a goal, it can be difficult to make decisions about what to prioritize and where to cut back. Keep the long-term goal in mind when making solid plans to help weather the recession’s waves, so you can emerge stronger than ever.
In short, while it’s difficult to grow your business during a recession, there are many opportunities that may not be available during good times. It’s an opportunity to become more efficient and even grow. You need to be clear about the core of your business and continue investing, while securing good deals and cutting back on less valuable assets.
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