An economic downturn doesn’t necessarily spell doom for your business. Instead, it could help highlight cracks in your business plan and help you build a better one.
Business strategies during a recession need to be backed by analysis, experience and solid judgement.
Here are some strategies that could help your business sail through tough economic times.
Know where you stand: Recessions impact every business differently. You need to know your break-even point – where your total revenue equals your total expenses. Analyse your books to understand whether you need to increase revenues or lower costs.
Improve cash flow: Cut any expenses that aren’t helping your business make money. Look at ways of lowering fixed expenses. To reduce the cost of inventory, for instance, ask your suppliers if they could charge you less if you agree to a longer-term contract.
Focus on marketing: Marketing in a recession can be tricky because many consumers are trying to spend less. If you can afford it, offer discounts or let customers pay by installments. In advertising and on social media, recognize that people are going through tough times and emphasize empathy, togetherness and even empowerment. Focus on the value and quality of your product or service to remind loyal customers why they chose your company in the first place.
Don't slash salaries: If you cut pay to save money, you risk demoralizing your employees. Instead, consider eliminating unnecessary overtime.
Courses at University Canada West give you the knowledge and practical tools to make well-informed business decisions.