Almost every country in the world now suffers from coronavirus disease or COVID-19. Even superpower country such as the United States has subdued by the virus. But it’s not only impacting people’s well-being but also the country’s economy. As of today, a lot of countries are on the edge of an economic recession.
Even the best-run businesses aren’t completely immune to the effects of market and economic conditions. These significant downturns likely to be caused by external forces with industry-wide, national, or global repercussions.
As a businessman, it’s okay if you feel unprepared for an economic recession. None of us does. But before it happens, you can anticipate it by preparing these things:
Take A Good Look At Your Cash Flow
Cash flow is the core of your business. But at a time like this, your cash flow needs more attention. According to a survey from JP Morgan Chase, the small and medium-sized business has to have a buffer fund to survive for 20 days without any income. The thing is, not all of us can do that.
If you want to survive the recession, there are some things you can do to balance your cash flow:
- Take a look at your receivables: Before any of this happen, you probably able to set the payment deadline for receivable up to 60 days. But now, it can’t go like that anymore. Follow up on your receivables. If necessary, set late fees to encourage prompt payment.
- Recheck your payables: Check again which of your payments that you need to settle as soon as possible and which one you can delay the payment. Pay the ones that close to the deadline and postpone the others until their due time.
- Reduce spending: Cut unnecessary spending to balance out your cash flow, such as stock photo subscriptions, cable tv, and other non-essentials.
Improve Your Creativity to Dampen the Economic Recession Impact
The worst impact of coronavirus happens to retailers, restaurants, and services such as gyms or barbershops. Declining visitor obviously will hit their wallet pretty hard. But as it turns out, hardships gave birth to creativity.
For example, coffee shop owners can offer a delivery service to their loyal customers. All you need to do is get the data you need from the membership management system and send the promo message via email or WhatsApp to your customers. This way, your members can enjoy your coffee without leaving their house.
If you are a restauranteur, you can start offering staple food such as salad, soup, or seasoned chicken. Are you a gym owner? You can promote an online session for your members to train at home.
Look For Disaster Relief Funds
Currently, governments around the world are allocating relief funds for small businesses/companies and households. If necessary, you can apply one to help your business survive during these trying times.
These funds are useful to help you pay your essential spendings such as employee’s salary, inventory purchases, and operations (electricity, gas, and water)
Make A Plan For the Recession That Puts Customer Satisfaction First
Your company’s success depends on its customers. Without customer loyalty, your business won’t survive in good times or a recession. When running a business during a recession, it’s important to consider better meeting your customer’s needs.
Read the online reviews of your business or send out surveys asking for feedback. Based on client feedback, you may need to offer more product selections, cut shipping times, or improve customer service. Taking care of your customers better isn’t just a good idea—it’s an investment in the success and longevity of your business. By putting service first, you’ll not only keep customers coming back, but you will also benefit from referrals.
Also Read: 5 Reasons Why Customer Testimonial is Important for Your Business
Long-Term Thinking is Important During and After A Recession
It can be tempting to make decisions only based on what your business needs right now. Taking a long-term perspective while managing a business during a recession, on the other hand, can get you far further. Sjahli said, “You must think about how you want your business to look after the recession,”
Take the time to put down your short- and long-term company goals. In the short term, you may want to break even or increase profits by 10% during the next quarter. But in the long run, you might want to sell your business as a franchise or buy a second business.
Viewing your organization with long-term growth in mind will help you make good choices and create a stronger recession plan now. “Your business decisions during the recession must align with your why, your core values, and the culture you want to build,” Sjahli said.
Conclusion
A business must be in a position to survive an economic recession, that is the truth. A business should avoid economic recession as much as possible and it should be in a position to handle this kind of situation, and create an environment in which recovery can be achieved very soon. In order to do that, a business must think about the possibilities of recessions. Once a possibility of a recession has been identified and potential risk considered, then a business should prepare for that possibility or risk by planning for such situations
