Before we talk about Strategies during a Recession, read our last post What is Recession.
The best way to deal with a recession is to face it. Trying to avoid the facts will only make things worst. You have to make your moves now, and prevent possible closure. Dark clouds of doubt? Savings dwindling fast? Your business going down the drain? These are just some of the signs of a recession.
If you have an ongoing business, and you are not a major corporation that will affect thousands of jobs, so the government is not even looking your way to provide a bailout plan, then you need to work the problem out on your own.
Try these strategies:
- Protect your core business. This is the business that is earning money. For example you are in the business of trading cars, but the cars are not moving. What is making money right now is your car accessories and car repairs. This is the business then that you should take care of.
- During a recession, repairs and maintenance will take an all time high priority because people cannot afford to buy new items, especially if they are bought on credit or require a huge cash out. If you are the most reasonable repair and maintenance service in town, your business will experience a boom, with the right ads.
- Let go of cash draining activities. If you have a client who has had a bad record of paying you on time, or in full, drop him. Your resources are better off in providing quality service to your good clients. Also, look for new clients instead. Imagine, your stocks will be held hostage by a bad client plus you do not get paid properly. That makes you a double loser.
- Find your weakest links. When a recession happens, you need to re-think your SWOT – that’s your Strengths, Weaknesses, Opportunities, and Threats. The whole face of your business will change because of a recession, and unless you make adjustments, you will face closure or bankruptcy.
- Start an account profitability analysis. Review each account and each department in your business. Are they bringing in the profits or is another section of your business covering their losses?
- For instance, if your business is trading cars, and your sales personnel is bringing the sales. That shouldn’t be a problem, right? Wrong. You need to start doing a performance review on each member of your sales team. The over all figure could just be masking people riding on the coattails of one or two successful sales members.
- Cutting non-performing people may be a difficult thing to do, but if you give them sufficient warning, then the ball is on their court, not yours. You could look at each of the non-performing staff, and think of re-assigning them to a different job. It may mean a pay cut for them, and having to start all over by being on probation, but if that’s what is needed to be done, you need to do it.
- Look at the bigger picture. If you continue to let some employees slack off during times of recession, you might end up with no business at all.
Finally, look at your other fixed costs, and see where you can lower overhead. If your company holds annual bashes, you could opt for giving your employees a bonus instead, since cash is a prime commodity; or you could hold your annual party at a less expensive location – like your office building.
There are many ways of using your imagination and creativity to lower costs and increase profits. Get your main team together, and get them involved in the planning process.
Quote of the Day:
“Stay focused. Every decision, every cutback, every improvement you make now must be beneficial not only in the present but more importantly in the future.”- Collin Almeida
It isn’t about recession, it’s how you handle recession. It’s all a game, and unless you have great strategies, you might fall under the radar, and not be able to maximize your full potential to make money.