We live in economically turbulent times, with the costs of living and running a business rising almost by the day. For some entrepreneurs, this is the time to give up; for many more, though, this is the time to tighten belts and make smarter decisions.
Starting a business is the easy part; running it successfully requires vigorous planning and strategising for both good and bad times. Here are five ways to thrive when the economy seems to be conspiring against your business.
1. Reduce costs
Bad economic times usually translate to low incomes for businesses as customers lower their spending. As disposable incomes becomes scarce, your business is likely to suffer a financial shortage. When this happens, it is time to cut down on the costs of operation and focus on saving as much as you can. Some of the ways you can reduce on costs include contracting freelancers instead of hiring permanent employees.
You can also control your obsolete inventory to optimise your finances – this means making every effort to prevent dead stock in your inventory. Focus on stocking items that are actively needed in the market so that you can easily convert them to money to keep your business afloat.
Additionally, pay more attention to cash flow – when the business is not doing well, your priority is to keep operations running and to try and build a reserve. To achieve this, you’ll need to monitor every transaction, especially expenditure. The business should incur only necessary costs.
2. Consolidate debts
Debt can be good, but it can also prove fatal to a business. In times of crisis, loans can render your venture bankrupt. To avoid this, when you sense the business is beginning to struggle financially, review your debt policies. Communicate to your lenders early and renegotiate payment timelines or amounts.
3. Review credit policies
On the other hand, if you have people that owe your money, it’s time to follow up closely. You can employ the services of professional debt collectors to recover as much as you can.
Secondly, reconsider your lending policies. Aim to reduce the amounts you provide to customers as debt by asking for a downpayment for services rendered or goods sold. Also, reduce the length of time you allow for credit to ensure you don’t affect your cash flow, or consider a non-credit policy altogether.
4. Focus on customer satisfaction
Henry Ford, the founder of the Ford Motor Company, once said:It is not the employers that pay the wages. Employers only handle the money. It is the customer who pays the wages.
Always remember that customer satisfaction is your number one asset. A happy client always comes back with another. Even in bad economic times, focus on delivering exceptional services to your customers. This proves your dependability and gives your brand an edge among your competition.
5. Keep your emergency pipelines active
As you brace yourself for upheaval, research and identify possible sources of funds should you be met with a business emergency. A bad economy is normally very volatile, making it difficult to make accurate predictions on what might happen the next day, month or year. Talk to different credit institutions or even close friends and relatives to establish a plan for an emergency loan should you need it.
Read More: The Standard