Preparation is often the key to success. Businesses who do not prepare for a crisis often find themselves in survival mode: cutting costs, tightening profit margins and laying off employees. While this may be the only way for some businesses to survive, it often leads to even harder times when the recession eventally subsides.
Ensuring your business has an action plan in place for an economic crisis can be the difference between collapsing and surviving.
Keep reading for our tips on how to prepare your business for a recession:
Be Flexible With Consumers
Recession affects both businesses and consumers alike. While your business may be struggling to stay afloat during these difficult times, your customers may be experiencing a similar problem.
Customers may find themselves out of steady work and unable to make payments or maintain regular purchases. Allowing your customers flexibility by extending payment periods, offering custom deals or other creative solutions can in turn benefit both them and your business.
While recessions are temporary, the impacts of helping a customer in a time from need can have long-term benefits. The compassion and flexibility you show to customers in difficult times can greatly improve customer loyalty and can go on to increase your word-of-mouth referrals.
Important Note: Just as businesses are increasing flexibility to help struggling customers, so are vendors to businesses. Don’t be afraid to ask your vendors what flexibility they may be able to offer your business.
Grow Your Customer Base
It’s common knowledge, businesses need customers to survive. What many businesses don’t prepare for however, is the loss of their biggest client or contact. It is vitally important to increase the number of customers you have to support your business should crisis strike.
Leading into a recession it can be difficult to find customers willing to spend on new products and services, especially if your business is in a non-essential industry. It is important to understand your target market and the financial difficulties they may face in order to know how and where to target them.
Important Note: Think outside the box and outside your current target location. Finding a way to expand your audience to those geographically unaffected by the recession can be vital to the success of some brands.
Offer New Products & Services
Change begins at the end of your comfort zone. Broadening your offering, products and services may be the key to surviving the next recession.
When a recession hits, customers buying needs and wants changes and your business should be prepared for this. Broadening your offering can help your business expand into new markets and reach a larger audience.
Important Note: This doesn’t necessarily mean creating new products or services. You might be able to repurpose your existing offering to service a different target market.
Stress-Test Your Business
Lets face it, you can’t plan for everything. As much as we wish we could, some circumstances are unavoidable.
Ensure your business has a plan in place for different crucial scenarios to best prepare for a potential crisis.
Ask yourself these key questions:
- What happens if we lose our biggest customer/client/supplier?
- What if we lose a key staff member?
- What is our breakeven number of customers/clients?
- What could we remove from our budget with little consequence?
Important Note: Use this time to identify potential gaps and opportunities within your business model. It is best to implement crucial changes prior to a recession or economic crisis.
For any business, the thought of entering a recession is scary and unknown. While many factors remain outside your control, it is crucial to give your business the best chance at success. Utilise the above steps to strengthen your business and ensure you have a plan in place to help in difficult times.
If you feel like your business will not make it through the current pandemic climate, get in touch with Insolvency Experts. With over 30 years of experience, we provide low cost company liquidation. Our free, no-obligation phone consultations are available to answer all your questions, outline all options that are available to you and execute the best solution for your company moving forward.
Call now 1300 767 525 and speak directly to an expert!