How Your Company Can Survive Any Recession￼
As you strive to keep your business afloat, consider the following things.
Be Ready for a Deep, Long Recession
Assume that the recession is going to be a little longer than you anticipate and even if recovery comes, it will be slow.
Assume Things Will Get Worse
Your customers will cut off their expenses just as you will be doing. Even though the past one year or so has been worse, you are yet to get to the bottom.
Cash flow is your key to surviving a recession. The 15 tips given here are meant to improve your balance sheet.
Slow Down and Reduce Outflows of Cash
Reduce Monthly Rent
Contact your landlord and see if they can lower your monthly rent—this may mean signing a long-term lease. Do what you must do.
Discount on Utilities
Utilities include phone, internet, power and water. Talk to your vendors’ competitors. See if they have any deals for you. If they have lower rates, contact your current vendor and negotiate before switching.
Cut Wasteful Spending
Some things like magazine and newspaper subscriptions may have to go. However, be careful not to cut productivity-boosting things like coffee.
Lease Instead of Buying
Do you need office furniture or a new computer? Do not buy one; lease. Although in the long run you will pay more, cash flow is all that matters for now.
Pay Payables Later
Contact your vendors and get them to offer better terms. If you get 45-day terms in place of 30-day terms, that is great.
Speed Up and Increase Cash Flows
Once you have sliced cash outflows, it is time to speed up cash inflows.
Collect Receivables Sooner
Offer discounts for early payments to your customers. 1-2% is enough. Save this discount for your best customers only.
Keep Existing Customers
Cutting business is great but you should still be able to service your customers. Remind them why you are their best option.
Double-down on Best Customers
New business may dry up during this period, but you cannot afford to lose your best customers. Send them a card, call or email them. Appreciate them and if possible, sign a long-term contract.
Prepare Your Business for Recession
Lower Inventory Costs
Fewer units in inventory may mean more cash at hand, which is what you need right now.
Revamp Your Market Campaign or Product Line
Let customers know that you are offering value for their money.
Your competitors are feeling the pinch too. Use this opportunity to get ahead.
Cut Once Bit Cut Deep
Layoffs are never fun, but your business has to survive. Do it once and make a deep cut.
Reduce Hours First, Salaries Later
Instead of asking workers to work the same hours for less money, just cut the hours.
Cut Your Salary
Employees need to see you sacrifice too.
Get Them All on the Same Page
Have an open and honest conversation with your employees. Show them that you are “in this together”.