A recession can really separate the business men from the boys. The best SME’s are able to dig their heels in hard and weather even the most crippling economic storms, as their competitors fall to the wolves of bankruptcy. When tough times hit, check that you’re doing the following to make your small business more recession proof:
1. Keep Marketing Harder And Smarter. Your ability to reach out to the right target customers is even more crucial when disposable incomes fall. Even if you have to freeze or lower your marketing budget, consider introducing more creative ways to reach your market. For example, guerrilla marketing can be one poignant way of reaching more people on a tighter promo budget.
2. Tighten Your Belt. As a business evolves, it incrementally incurs new expenses that can be easily left unchecked during the good times. When the economic climate becomes ever more challenging, it’s an ideal time to do a thorough audit to isolate crucial expenses and behead the ones that bring no genuine ROI.
3. Get On Top Of Bad Debts. For a small business, bed debts can be the fine dividing line between carrying on and shutting up shop. Consider changing your debt collection procedures – this can involve more aggressive pursuit of debtors who are late, or reducing the number of days in between collections. This is also a good time to review how your various business contracts all contribute to your revenues. Companies that rely on just a handful of contracts making up the lion share of their revenues could find themselves in a spot of bother if the recession claims a major contract. Evening out your income streams will help reduce any one contact being lost.
4. Think Client Retention. Your business should always be geared towards getting those repeat orders from your clients. In a recession this is even more crucial – after all you’ve done the hard marketing work to get them on your books, so it’s worth doing that little bit extra to keep them coming back for more. There are several methods you can use to improve retention – for a start build a relationship with your clients through social media, blogs and newsletters. A client who sees you as a real person as opposed to just another brand will be far more inclined to offer recurring patronage. Additionally, during tough times look to add value and make sure your price gives them all your clients need and more.
5. Tap Into Backup Sources Of Finance. Even fundamentally sound small businesses have come a cropper thanks to a brief period of cashflow bother. Recessions can be rough to weather. Those budgets you set during good times suddenly seem a whole universe away as sales plummet amidst rising rates and rents. Cash control should always be kept on a tight leash during all economic climates, but in a recession it’s perhaps even more important. Make sure you have adequate cash reserves and make back up plans RE your finances in the first instance of a wobble.
6. Leverage The Job Market. Recessions are often synonymous with a high supply of skilled labour. This might not be apt for every business, but if you find growth opportunities within a recession, it can be the ideal time to take advantage of such a high supply employee market.