In this era of uncertainties, decrease in customer trust and product sales can heavily impact businesses, making them prone to crumbling during an economic slump. Although no business is exempt from such conditions, they are likely to affect small enterprises much more. This is because such businesses fall short of backup plans and reserve capital/resources that could help them tide through times of hardship.
How to deal with business slumps?
Therefore, you must consolidate your business on a holistic basis if you wish to survive during an economic downturn: from streamlining cash supply, generating more revenue to increasing your customer base. Such measures can, when carefully implemented, make your enterprise immune to the market destroyer that is recession. Given below are some of the best ways to do the same.
Simply put, a sustained and seamless cash flow is the fuel using which you run your business. If it stops, you have got a huge problem that will halt your entire business operation, negatively affecting your revenue. If you want to survive, keep the cash flowing!
Look for new and unique ways of cutting down on production costs while keeping your quality and customer service intact. A lot of entrepreneurs overlook the need to ensure optimum inventory management, which not only calls for innovation and latest technological advances but also a sharp attitude towards customizing inventory. With a more diligent approach, you can reduce unnecessary purchase of goods and get better prices for the same. Particularly, look for drop-shipping arrangements that suit your business style and help you.
Contrary to popular opinion, diversifying your business does not mean blindly adding to the list of services/products that your enterprise offers. It requires extensive research and analysis. Therefore, if you do not closely consider your core competencies, the very essence of your core business can be hampered, posing a threat to your renown and reliability.
In case you are heading an expanding business, you will need to take advantage of opportunities to extend your customer base; this involves steering customers away from competitors and establishing yourself as the most trusted brand.
The question is, how do you achieve an edge over your rivals? The clinical way to go about this is to collate data on market competitors and look for novel ways to attract consumer interest: various methods of advertisement and brand outreach, consumer interests/dislikes with company services/products, novel customer relation practices.
As the old saying goes, charity begins at home. Your business home consists of all those loyal and eager customers who are devoted to your brand and what you offer. Never let them go; instead, make existing customer retention and new customer relations go hand in hand.
Trusted customers will give much more avenues and possibilities of sale and advertisement. Therefore, ensure impeccable customer service is provided to your loyal buyers. Always keep regular buyers in the loop: what is already in the market, what is upcoming, what are the grievances with current products, and customer feedback on quality and product genre.
Keeping customers at the centre of your business universe, gauge each of their requirements to paint an overall picture of customer profiles. During an economic slump, these will help you retain the large chunk of your devoted buyers.
Marketing strategies are integral to business expansion, without which your enterprise might collapse during a period of recession. Therefore, you need a smart and savvy team of strategists who create innovative new marketing measures to retain and appeal to overlapping customer bases.
During an economic slump, your business might also be deterred from seeking business loans, especially if you have a business credit rating that falls below par. Therefore, make sure that your ratings are top-notch everywhere and design strategies for the same.
Moreover, an ensuring track record of personal credit also goes a long way in increasing your chances of acquiring loans during slumps. In some countries, governments may also provide cheap and baggage-free loans that will kickstart your business and hammer it back into shape. Thus, keep a keen check on credit ratings, whether business or personal.
COVID-19 and Business
Following the COVID-19 pandemic, world economy has witnessed a steep slump as a result of business operation closures to main social distancing norms and virtually a worldwide lockdown. Every enterprise is suffering major losses and counting their cards carefully. Particularly, to avoid bankruptcy or dissolution, many businesses are refashioning their outlook, strategies, budget, and revenue flow for the post-lockdown revival phase.
In light of this grave situation, most enterprises are finding it difficult to survive, let alone operate, and most of them are seeking governmental and bureaucratic help to navigate through the absence of operations and revenue loss, as well as the restarting of business. Losing their usual business spaces, they have been forced to conceive novel strategies for virtual business in a world that demands minimal human contact and social distancing.
Comparatively, smaller-scale businesses and start-ups have been adversely affected by halt in economic production, due to fewer monetary resources to tide over such a slump. The economic lockdown has directly affected such sectors, with some businesses having to completely forget their dreams and goals for the future.
To overcome the obstacles presented by such unprecedented events and associated policies to ensure the survival of humanity, as an entrepreneur you must change the rules according to the adversary. Given below are some new factors that you must heed while designing your business survival measures in the COVID-19 economic slump.
· Comparing revenue-expenditure balance: As the coronavirus rages on earth, your business must carefully assess its fixed and variable expenditure in addition to profit. When the pandemic is under control, the inferences from such assessments will help in designing new strategies as per the economic situation.
· Does your model work: With the awareness of a volatile, fluctuating market, you must re-evaluate your enterprise to check whether the existing business and marketing strategies hold good in the post-pandemic economy, considering all budget and profit schemes. Furthermore, you must evaluate whether the current model will hold good with regard to financial accountabilities.
· Finding the “new normal” measures: Conduct a thorough analysis of expenditure to cut down as much as possible, to protect against the initial loss of revenue due to the COVID-19 lockdown. Thereafter, you must think of what might happen if the coronavirus persists and the lockdown has to be extended; create teams that will design need-of-the-hour strategies, retain customer base, and be responsible for all employees, especially those lower down the business hierarchy. After re-creating the company’s long-term vision and revenue goals, you must clearly communicate the same with your clients, customers, and workers.
The above lists are by no means exhaustive. Indeed, businesses with pre-acquired capital and resources might choose to deploy them at a time of such dire business crises, but there are many businesses that do not have this luxury. For all such enterprise types, the key factor now is to reflect, rework, redesign, and reopen with the full awareness that retaining customer trust is going to be crucial to tackling the slump of slumps, so to speak. Always remember: a stitch in time saves nine!