Tips to Recession-Proof Your Business Immediately
If a financial crash happens, at least you’ll be prepared.
If a financial crash happens, at least you’ll be prepared.
With so much uncertainty in the world right now, it’s no wonder that people aren’t spending.
They’re at home, fearful, furloughed or fired.
Less personal income means less expenditure. Less expenditure means less income, for companies.
It’s a vicious cycle.
People you know will lose jobs. People reading this will lose jobs.
Hopefully, these tips get to you before it’s too late.
Cash is King
How is your company’s cash flow? Is your company even cash-flow positive?
Ideally, you’ll always have 6 months of personal savings to see you through the unexpected.
As a business, it’s impossible to expect the same, but the higher the amount in your bank account, the more likely you’ll be able to ride out the storm.
I know that seems obvious, but for companies like wholesalers, or those who have outstanding invoices on 90-day payment terms, it’s about to get dangerous.
You can’t have any open invoices right now. If the service or product has been provided, call in your chips.
You going to have to build a cash reserve — and quickly.
Do you have enough profit to lose?
High margins are beloved by every company… But are yours high enough?
Low income creates a domino effect of less spend. So to inspire sales, businesses run massive sales. They slash retail prices beyond the point of friction to loosen the purse-strings of customers.
Some deals are too good to pass by, even if your customers aren’t financially sturdy right now.
If you’re working with an 80% profit margin, see if you can survive with 50%.
If you’re working with less, can you at least aim for 10% to stay afloat?
Cut costs
Non-essential spend has to be cut.
Follow the 80/20 rule to ensure you’re looking in the right place first.
What 20% of outgoings takes up 80% of your expenses? It’s probably staffing.
If anyone isn’t providing a return to your business right now, they can’t stay.
The hole in the boat always needs to be plugged early. If it isn’t, you’ll be destined to sink.
For other expenses, cut subscriptions, freelancers and services that you can live without in the short-term.
Every piece of expenditure needs to be essential to the continued survival of your business.
Even if you don’t need to get rid of it right now, you still should.
A penny lost today could be worth a dollar down the road.
Clever marketing
How much does your business spend on ads? It’s not always the most cost-effective way to reach people.
During times of low cash-flow, you need to get creative with your marketing.
Find ways to reach people for free.
By risking your company’s cash flow on low-performing ads, or expensive product features, you’ll be putting the business at risk.
Consider it a challenge, to get the most press for the lowest price.
Your competition is about to get fierce because the businesses that survive are those that have the biggest market share.
During tough times, how do you ensure that customer’s spare pennies come to you?
Dump assets
Do you have an office? Extra laptops? A room full of IT equipment and lumbar-supporting chairs?
PRO TIP = DUMP ASSETS.
Your goal now is to increase your available cash reserve.
With the recent pandemic, it’s been required that staff work from home. Did that hinder your business? If the answer is no, think about whether staff can work remotely long term?
By selling your office, you’ll give yourself a cash safety-net to support your business through any loss of income.
All the extra laptops in storage can be sold. Karen from accounts has her own computer anyway.
Company cars can be sold. This was a benefit of the job, not a necessity.
If your intentions are to save jobs and ensure the survival of your business, some sacrifices are going to have to be made.
There’s going to be a huge re-distribution of wealth occurring and by following these steps you can ensure that it’s not going to be destroying your potential to provide for yourself, family or colleagues.
“By failing to prepare, you are preparing to fail.” — Benjamin Franklin