As a business owner, you probably already know that the economy can change at the drop of hat. There are truly thousands of different variables that can impactthe economic situation at any given time. When times are good, you will experience tremendous growth and consumer spending, but when times are bad, all businesses could potentially suffer, including yours. Regardless, of how things are looking or how much money you have in the bank, an economic down turn could be right around the corner and it could finically ruin your company. This is why it is imperative that you ensure that your business is always prepared and ready for these types of situations. Below, you will learn some key tips and information that will make sure you and your business are ready for a crashing economy.
Increasing Your Customer Base
When the economy takes a turn for the worst, spending within your consumer base will be at an all-time low. Your current consumers will be hesitant about spending their cash because they will be storing it away for a sticky situation. However, just because one consumer base is experiencing a crisis doesn’t mean that there aren’t consumers out there spending. You will need to diversify your efforts and reach out to the consumers that are spending. For instance, instead of just relying on one major client, you might need to reach out to several smaller clients to ensure that you are reaching your goals each month.
Target different demographics, reach out to different companies, and even start up a website if you need to expand globally. The larger your consumer base the less likely your chances of being impacted by a recession.
Expanding And Growing Within Your Local Geographic Area
You truly never know when the economy might hit a recession or take a turn for the worse, so you always have to be smart and cautious about your spending. If you are looking to expand, hire more employees, or even introduce a new product on the market, you always want to start within your own local geographic area. Since you already have an established consumer base in these areas, it will be much easier to promote and sell your new services or products to these people. Once you start making more of a profit, you can then look to expand outside your general area. Just always be careful and conservative when it comes to spending, because you truly never want to over indulge. Using the working capital for business purposes to the best of your ability.
Properly Pacing Yourself
When you have lots of money coming in and new customers walking through the doors everyday, it can be easy to get over confident. You probably figure that things are going exceptionally well and your business can stand to grow a little bit. While this might be true, you never really know what is right around the corner. Instead of expanding right away, it might be best to store away some money for an emergency and build up an emergency fund in the event that something does go wrong. This strategy will make sure that you always have the extra funds to cover yourself during a recession.
Always Seek Out Higher Profit Margins
Just because you are doing good and making money right now doesn’t mean that you couldn’t always be making more money. Just a few tweaks to your products or services and you could be making as much as 10% more on each sale. This will not only increase your profits, but it will give you a little bit of a cushion to fall back on in uncertain times. This could be something as simple as increasing your prices as 10% or using cheaper manufacturers. However, whatever you do, you never want to cheapen down your products or services so that they are less than what your customers have come to expect from you and your business.
Take A Good Hard Look At Your Expenditures
When a recession hits, the first thing that any company or person is going to do is to start cutting out luxuries and the most expensive expenditures. It is true that this is a smart move, but it is not really when you are going to save the most money. What you really need to do is take a good, hard look at where you are spending your money and see if there is anything that you can do to reduce your current costs. Do you really need that round of golf each week with your biggest client? Do you need to fly first class every time you go somewhere? Can you contact your Internet provider and negotiate cheaper prices? These are all questions that you need to consider along with others to figure out how you can stretch your dollar.
Establish Challenges And Rewards
As a small business owner, you probably only have a few employees. This can be a good thing because it means you won’t be dishing out tons of money on employees that aren’t doing anything. However, with such a small employee base, you can truly create a competitive environment. Of course, you always want to make sure that morale is high, and you can do this by rewarding the highest earning employees. Even if you are the only employee you have, you can reward yourself for making a big sale or closing a huge deal during a recession. Whatever situation you find yourself in, you have to make your work environment exciting, challenging, and rewarding, otherwise you and your employees aren’t going to want to put in the extra effort.
Mentally Preparing Yourself For The Grind
You probably sunk a lot of time and effort into building your small business. Now, that you are earning and making new customers, you probably don’t want to go back to putting in long work hours for half the pay, but during a recession this might be something that you have to prepare yourself for. Just keep reminding yourself and your employees that the recession won’t last forever and there will be a time when all your efforts will be rewarded.
Looking For Potential Investors
One of the great things about your business is that it is your own. Your own it, you get to operate it, and you set your own hours. Unfortunately, if you find yourself in bad enough times, you might have to seek out other investors or another potential business partner. This might not be ideal, but at least it could prevent you from closing your doors altogether. You could even seek out a silent partner that continues to allow you to run to day-to-day operations of the business. Just remember because the economy is bad it doesn’t mean that there aren’t people out there with money looking to spend it.
Keeping Your Debt Low
There are a lot of expenses that come with starting a small business. It is highly likely that you have tons of bills that you have to pay on a weekly basis. You might even have several business loans that you are paying on. Whatever this situation is, you want to make sure that you are always making your debt payments on time, because you don’t want them to build up. With less and less money coming in during a recession it will make paying back the loans and bill twice as hard.