Throughout history, there have been periods in a nation’s economy where things just crash down. What follows are severe effects as most people can’t even meet their daily obligations.
The Great Depression led to worldwide economic failing and many people lost their livelihoods.
Similarly, the financial crisis of 2007/08 also left a lot of businesses out in the cold, unable to survive. As a result, it has become prudent for business owners to put in place measures. These measures will help them sail through any difficulties that may come.
But what exactly can be done to help a business survive any recession?
Have a tight leash on your cash flow
It is no secret that a great number of businesses fail within their first few years. The reason?
Cash flow issues. Most businesses have no idea how much they are making and spending, and this can be a terrible thing if the business is spending more than it is making.
The first step is to get a grip on your finances. Have a clear outline of what your money is doing.
Also, create an outline of how you are going to use this cash flow to increase your profits. Your pan should be flexible enough to have contingencies for various types of economic issues that may arise.
Have multiple revenue streams
This is not just sound investment for a business, but also for you as an individual. A single source of income can be greatly affected in case of a recession, or a worldwide pandemic. This issue can be remedied by having several income streams for your business. When the situation does come to the worst, you will still have some income as not all streams will be affected.
Invest in the relationships you have with clients
A lot of marketing is centered around a sales funnel where the emphasis is on attracting new clients to keep the income rolling in. Once a purchase is made, most pay little attention to their customers.
Repeat customers can be the greatest thing to happen to your business as you won’t have to spend large amounts of money to convince them to choose your business. Simply maintaining a relationship with them and maintaining excellent service to them.
Build with the intent to sell
If you were going to sell that business, wouldn’t you ensure that its operations are top-notch?
This is the only way you are going to rake in the big bucks, isn’t it? Now, you don’t have to sell your business at all, but treating it like you are going to sell it means everything will have to be functioning like a well-oiled machine.
Don’t wait for problems to get financing
Every instinct tells you to avoid unnecessary debt, and a lot of advice columns will reiterate this.
Will this is sound advice, it is also a missed opportunity to grow your business. Banks are already preparing for the next crisis. When it does come, the first thing they will do is limit access to credit. If you are in a cash crunch then, your business will no doubt fail.
A prudent business person will make use of this facility in good times to help finance their growth and development. When that cash crunch does come, you will have insulated your business from unnecessary debt.