11 ideas to use to weather a turbulent economy
May 11, 2020
Weather a turbulent economy and set your business on solid ground for long-term growth: 11 ideas to use in these challenging times. How to overcome difficulties during a crisis and survive?
1. Take stock of your cash resources:
You need to determine how much cash you have for the future. Once you have a picture of what you have in your cash account, you should have no problem in managing it well and get maximum returns. If you are already generating revenue, do a sales projection to know if the cash flow for the coming 12 months will be enough to cover your bills. In case your available cash and projected cash flow cannot cover expenses for the next 12 months, that should raise the red flag, and whatever you do after you come to the knowledge of that shortage becomes an emergency.
2. Roll out budget cutting measures without delay:
In times of crisis and turbulent economy, cost reduction becomes a necessity, not a choice, and the faster you move to cut the excess fat the better for your future in the business. Clip expenditures that are not core to the survival of the business. Sometimes, spending cuts may include trimming employee perks. If there are emergency expenses to be made, you can complement cost-cutting with taking out a loan. Use the money to maintain operations and keep generating profits. You can return to loose spending once the situation has improved.
3. Be ready to make hard decisions and to disappoint people:
One of the hardest decisions is If after doing away with unnecessary costs you still find that the company cannot survive the crisis, you should start thinking about hard decisions such as letting go of some employees and suspending compensations for founders. It is not easy to see some of your team members leave or founders forgo salaries, but it is survival time. Anything that can keep the company afloat, like staff lay-off to cut operating costs, is worth considering.
4. Go slow on generosity:
It is not a bad thing to be generous, but it is not good either to attempt to be generous when you don’t have what to be generous with. If you have been treating your customers to some free services, you can ask them to start paying for them and have a good reason for the change of heart. Expect mixed reactions when you start asking payment for what you originally have given away free of charge. While some customers will protest and threaten to walk away, others will be willing to do whatever they can to keep you in business so that you can continue serving them.
5. Increase prices:
Raising prices in time of recession and short funding can plug a big financial hole in your company. The idea here is to try to squeeze as much as possible from the sales of products to keep the company from collapsing. Price raises of 10% cannot wreck the ship, but you should make it clear to the customers why you are taking the action. Once again, supportive customers will have no problem if paying higher for your products or services can keep you around so that they can continue enjoying your services. As with the case of charging for once free services, expect mixed reactions from your customers when you increase prices. But if you have a good reason for raising prices and you render great customer experience, you need not worry about the price hike protests because they will fade in the long run.
6. Ask for upfront payment:
Amid a recession and with funding not forthcoming, your greatest problem is cash flow. If you don’t have enough, it becomes impossible to survive. Asking for advance payment from your customers can help you solve some of the cash flow problems. If combined with if price hikes and charges on previously free services, advance payments can have a dramatic positive impact on your company’s financial health.
7. Time to improve customer service:
You might be tempted to cut some customer service benefits when times are not good, but nothing could be further from the truth. Improving the quality of the service you render you customers can be the key. During the 2009 recession I used this as the driving tool and we grew by 11 percent that year. In a turbulent economy, delivering great customer experience will not only lock the customers in because they can’t imagine where to find your replacement, but also prepare the ground to upsell the customers so that you increase the average revenue per account. Improving customer satisfaction is as much a weapon as it is a tool.
8. Fire your bad customers:
You don’t need customers who worsen your pain and the sooner you show them the door the better. Some customers end up sucking the company instead of helping it grow. You don’t need customers who seek hefty discounts only to delay payments for unnecessarily long period after you make the deliveries. You should consider firing bad customers, if they worsen the situation for your company in a sluggish and turbulent economy.
9. Seek help from unexpected quarters:
In a turbulent economy, open a free conversation with your team and encourage them to share tips on how the company can survive the economic downturn. You can be amazed by the idea contribution of your juniors toward steadying the company and making it grow. Before you look outside for advice that may cost you money, talk to your team and you will not only get their ideas but also learn about their dreams for the company.
10. Pitch to new and existing investors:
Do not wait until it is too late to salvage the ship in the troubled water. Seek audience with existing investors and let them know the business needs more money to survive the difficult economic conditions. The reaction will be mixed, but if they want to see the business survive, they will bring more money. Reach out to new potential investors and let them know why supporting you will make a difference in their own pockets. They should be excited and you will have the money you need. Sometimes what investors want to see is an entrepreneur who strongly believes in their idea no matter the economic situation.
11. Aggressive Marketing.
In a sluggish economy we tend to drop our Marketing guard. This is the time where you should double your budget and use your wits to make sure your clients choose you over your competitors. Keep investing in social media for business marketing. With great marketing comes great business.
Well, what doesn’t kill you should make you stronger and many great companies developed in difficult times and in a turbulent economy. So, yours is no exception if you keep the dream and faith alive.
By Brett Michielin of Ideasvoice SA