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Declines in consumer confidence and decreased sales can threaten all businesses, but small businesses can be particularly vulnerable. They often don’t have reserves to help them weather difficult times.
From protecting your cash flow, building your customer base to looking up a few short term loans reviews for funding, implementing a few practices in advance can help recession-proof your business so it survives and even thrives during economic downturns.
This article from luminablog.co.uk will show you how you can strengthen your business during an economic downturn.
Preserve Cash and Reduce Debt
When getting into a business, it’s common to acquire debt. However, it’s important to preserve cash and reduce debt as soon as possible. Studies show that companies with high levels of debt are especially vulnerable during a recession.
Why? Recessions often lead to smaller profits, and if your cash flow dries up, it could lead to the end of your business. Once your business starts making money, you’ll want to reduce your debt as soon as possible. Ultimately, the entrepreneurs who were successful in the 2008 recession were the ones that were not overly leveraged and so were able to stay agile during tough times.
Recession has a way of spreading through the supply chain. It could hit any of your buyers before you, and their problems quickly become your problems. That’s why your revenue shouldn’t be heavily dependent on a few customers.
The key when diversifying your investments is to invest in different areas such as stocks, products or businesses that would each react differently to the same event, in order to maximize your returns. You don’t want all your business coming from one market segment and certainly not a highly concentrated income from a single source.
Reach Out To Everyone
Whether you already have clients or need to start building your business, be proactive and reach out to anyone you’ve worked with in the past or any prospects to check in and see if there’s any way you can offer your products or services to them.
You’ll probably get a lot of rejections, as many businesses need to be conservative with their spending at this time, but if you expand your reach as wide as you reasonably can, you will find businesses that are still going full speed ahead. For example, many software companies can operate remotely and may need help to support their own clients’ shift to working from home.
Invest Your Time
If you have more time on your hands now, whether that’s due to a slowdown in your business or because the time you would have spent on other activities during nights and weekends is now free, you can build up areas of your business and your own skill set that you may have been putting off.
For example, you can use this time to create an online portfolio, set up an e-commerce website, expand your social media presence, or any other activity that you may have wanted to do but couldn’t find the time before. While these actions might not immediately lead to customers, they can help you build a pipeline of future clients.
Don’t Cut Back on Marketing
Many small businesses make the mistake of cutting their marketing budget to the bone in lean times, or even eliminating it entirely, but this is exactly when your small business needs marketing the most.
Consumers are restless. They’re always looking to make changes in their buying decisions. Help them find your products and services and to choose them rather than others by getting your name out there. Don’t quit marketing. Step up your marketing efforts.