How to recession-proof your company?
Everyone must still remember the big recession that took place in 2007-2008. Market crash that happened in U.S.A. caused the biggest recession since the Great Depression of the 1930s. It rolled over the entire world affecting markets of every country in one way or another. Fortunately, we managed to bounce back and both U.S. and the European economy are thriving again. Some might think that all that’s bad is behind us and we can look forward to years of prosperity. Unfortunately, the nature of the business cycle works against this theory. Since the cycle consists of downwards and upwards movements we can expect that sometime in the future another recession or downturn will occur. We can’t fight the economic cycle but we, as business owners, can prepare our company for unfavourable business conditions. What shall we do to be ready for times of austerity?
Penetration of sales channels
Sales channels and customers are the biggest assets of every company. After all, they bring turnover. At all times, business owners should look for ways to strengthen their relationship with their distributors and take advantage of company’s sales channels. There are few strategies that can be adopted. It can be developing a new product, expanding into new markets or penetrating markets the company is already present on. Regardless of what strategy we decide to adopt and whether we are working during times of prosperity or austerity, we should always look for ways to expand the business.
Outsourcing allows companies to be more flexible with their costs. We can outsource every aspect of the company that is not connected to its core operations. Instead of opening a brand new department, buying new equipment and hiring people it is simpler and more cost effective to look for a company that could provide the service we need. During the downturn, we can give up the company’s services, switch to a cheaper supplier or reduce the amount of service we are buying.
To bloom in the times of economic boom and survive decline each company should develop a business plan. Since the future is uncertain more than one plan should be created. Because it is easier to run a company during favourable business conditions developing a plan for such time is not that important. We should focus on creating a detailed schedule of action for recession.
A financial forecast is as important as a business plan. The rule of business is to assume worst case scenario in planning, doing so we are always prepared for a crisis. We should do the same creating a financial forecast. Quite often companies over-estimate sales. Such assumption might be dangerous to the future of the company. As with any plan, it is important to update the schedule frequently and compare it against the actual data.
Invest in smart marketing
As Henry Ford, the founder of the Ford Motor Company said, “Stopping advertising to save money is like stopping your watch to save time.” Especially nowadays good marketing is essential to the existence of the company. Even during the recession, we shouldn’t abandon marketing efforts. It would result in a decrease of sale in short time span.
According to different experts, there are many different ways to prepare a company to the recession. Whatever path you decide to take, please remember: hope for the best but prepare for the worst.