How Your Business Can Survive In A Recession?

Recession is here to stay… for at least another one or two years at least.

It is not going to be a ‘V’ shape recession but a ‘L’ shape one.  

Huh? Why am i so pessimistic?  No i am not.

If given a choice, i would love to be optimistic about it.  However, the way the US solve their problem is simply printing more money from selling treasury bills to bailout bad companies that should have file chapter 11.

In so doing, the whole US economy is inflated at a phenomenal rate and yet still in bad shape.  This is what we call Stagflation.  Soon, another dollar crisis is in the pipeline and things are not looking too good.

One this happen, the Stock and property market will tank in the US.  The rest of the world will suffer with it as US is the main trading partner for them.

When will the second wave of crisis come?  Nothing know.  Only God know and he ain’t telling you and me.

In time like this, we can only do our utmost to protect and groom our business for the next wave.

Here are some  thing we can do now.

1)  Reduce operational expense.  We can do so by negotiating cheaper insurance, mortgage payment.  If need to, we can close down operating branches that do not generate good profit for our business.   If the financial pinch is too huge, we should even retrench unproductive staffs.

2)  Flush out our inventories quickly by reducing the cost or through smart marketing.  The more cash we are holding, the better we are in a time like this.

3)  Extend your credit limit from the banks to your business as far as you can.  In time like this, you need more bank credit to do more with less.

4)  Change your marketing plan to adapt to the recession so that you can squeeze in more profit to your business with less advertising dollar.  As an example, you can use this opportunity to get rid of 80% of your bad customers and focus on your 20% of your best customers.  By freeing your business resources the burden on attending to the 80% of your bad customers which contribute to only 20% of your overall business profit, you can then focus on growing your 20% of your good customers base which give your business the 80% of the profit.

5)  Reduce the period of credit extension to your customers.  You can do so by giving your best customers a 5% discount on your inventories and services so as to motivate them to pay earlier.  The earlier you collect cash in your cash register, the better you can use it to grow your business in other area like advertising and buying property and tools at a discount.

6)  Maximize your advertising cost by utilizing the internet for cheap and effective marketing.  In a recession, many of your clients will be buying stuffs from the web as it is cheaper that way.   Flow with what your customers and prospects are moving and you can’t be wrong.

7) This is also a good time to expand your market share by increasing your advertising dollar from the saving and cash that you receive from point 1 to 6.  In a recessionary time, where advertising cost goes down, it is your best opportunity to really squeeze that advertising dollars to expand your business and take away the cakes from your competitors.

As mentioned in point 7, it is not all gloom and doom for your business in a recession.  Do the right thing right and your business will not only survive the recession but emerge from it stronger and more profitable than ever before.