A few weeks ago we spoke about “Succeeding in a Recession”. Today we will look at “Growing in a Recession”.
Can companies actually grow stronger during a recession? How do you capitalise on the problems that your rivals encounter during tough economic times? For small businesses, keeping an eye on the core business, maintaining a healthy cash position, reducing operating expenses, increasing efficiency and strengthening existing supplier and customer relationships will all go a fair way to help ensure your business weathers today’s tough economic climate. Don’t get too bogged down in battening down the hatches – downturns can also open up opportunities and continued investment during a recession might actually be the smartest move you make.
While the first priority of any business during difficult times is to become more efficient and cost effective, if you are focused, resourceful and proactive in spotting opportunities to grow – even during a recession – your business will be in a much stronger position when the market recovers. As a result, you may find that you’ve also managed to gain market share from more cautious competitors in the process.
Here are some tips to help you position your business to survive and even thrive in the economic downturn.
Keep your eye on cash-flow. Continuously monitoring and controlling cash flow is fundamental to continued business success. Monthly forecasting will ensure expenses and any planned expenditure is in line with money coming in. If you’re in control of your cash, you are also in a better position to make any excess cash work for you.
Re-negotiate with suppliers. Lowering supplier costs will provide ongoing benefits and can be achieved in different ways. If you don’t have available cash, extending payment terms will avoid having to borrow money to pay suppliers. If you do have cash, try and negotiate a discount for timely payments.
Expand your supplier base. In a tough economy, don’t rely too heavily on any one supplier. Ensuring that your business isn’t dependent on one or two key suppliers means that if they falter badly or fail completely, you won’t fail with them.
Now is the time to make your current customers the priority. The cost of gaining new customers is significantly higher than growing your existing customer base and intelligence about buying patterns will also enable you to offer special deals to encourage customer loyalty and continued spending.
Increase marketing and advertising. Believe it or not, now is not the time to reduce your marketing and advertising efforts. While it would be prudent to reallocate funds to areas that are strategic to the business, there are cost-effective ways to raise brand awareness and create market demand for your product or service. This is a great strategy in a downturn as you’ll be doing so when your competitors are likely to be scaling down their efforts.
Invest in new technology to lower costs and increase competitiveness. Technologies that enable smooth collaboration between employees, partners, suppliers and customers are a sure way to boost efficiency and reduce costs.
Critically evaluate your staffing needs. Reducing excess staff, while sometimes unpleasant, will provide an immediate cost savings but can impact negatively on customer service levels. But as other organisations lay off employees, many good people will find themselves searching for work. While other skilled workers may still have a job, they may be disenchanted with their struggling firms. Capitalise on this opportunity to identify and attract talented employees, while a state of flux exists in the labour market.
Start spending. While spending during a recession can seem the opposite of good business sense, it is in fact what smart companies do to see them through. If you invest in initiatives that strengthen your business, you will be better placed to hit the ground running when the economic climate picks up.
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