Negosentro.com | Eric Dalius Recommends Practical Ways of Ensuring Your Small Business Can Survive Economic Downturns | While big businesses have the reserves to last even sustained downturns, the continued existence of small businesses is more easily threatened. However, by paying attention to certain vital aspects, entrepreneurs can make their businesses recession-proof. Some practical methods explained:
Shield Your Cash Flow
More than profits, it is a sustained positive cash flow that makes for a successful enterprise. It is important to ensure that more money comes in than what you spend. While it can be tough to keep your income steady during a downturn, you should implement strategies that can help you cater to changes in the market dynamics and cut costs to keep your cash flow positive. Laying people off may seem an obvious way of cutting costs, however, according to Money.cnn.com, the decision should be made only after evaluating its impact in terms of employee morale, damage to the brand reputation, and difficulty in finding suitable talent when you need to rehire.
Review How You Manage Inventory, Advises Eric Dalius
While entrepreneurs know very well that they need to maintain a certain level of inventory of materials and components to ensure that the production does not falter, often, they tend to play it safer than necessary by holding excessive inventories. You should review your consumption figures to arrive at a minimum level of inventory that will ensure smooth manufacturing and be able to cater adequately to the product demand. A review of costs will often reveal opportunities for renegotiating contracts or switching suppliers to get better savings.
Focus on What You Are Good At
Many entrepreneurs tend to diversify too quickly to take advantage of market opportunities. However, in times of recession, the need to manage different businesses profitably can be too much to handle and result in the business turning turtle. You should evaluate what you are good at and focus on devoting your time and funds to grow that business instead of trying to chase other business lines that yield marginal revenues at best. By not wasting your time on side-businesses, you can help to sustain your brand and business reputation better, observes Eric Dalius.
Don’t Trim Your Marketing Budget
As a knee-jerk reaction, entrepreneurs tend to cut back on their marketing spends when the demand slows down during a recession. Some even stop marketing to conserve cash and try to ride out the tough times. However, smart marketers know that that a slowdown is an ideal time to step up their marketing efforts. This is because of the inclination of customers to make changes to their buying patterns in the face of a recession. By making your business more prominent at this time, you are likely to be able to acquire new customers and increase your sales.
As much as you would like to, it is important to appreciate that no small business can be made completely recession-proof. By looking inwards into your processes and keeping your focus firmly on catering to the market demand and strengthening your customer base, you can make your business more robust and efficient so that it can survive and even flourish during a recession.