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A Business Guide: How to Survive a Recession and Thrive Afterward

March 31, 2020

In these times of uncertainty, it’s fair to presume that eight out of ten business owners will tell you that not surviving an economic recession is their worst nightmare.

recession

/rɪˈsɛʃ(ə)n/

noun

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.


Yet, every generation has to face it at least once in their lifetime. The last recession we still vividly remember was back in 2008. Back then,
managing business during recession looked like a mission impossible. Only in the US, 170 thousands of small businesses were shut down and more than 3 million people lost their jobs. The consequences were so severe that certain countries never fully recovered. 

A decade later, experts believe we’re standing before another great recession this time caused by the COVID-19 pandemic. As much as we’d like to be optimistic, history taught us that it is small business during recession that takes the hardest hit. Nonetheless, that doesn’t mean we should throw our hands in the air.

“A smooth sea never made a skilled sailor.” – Franklin D. Roosevelt 

It may be that we don’t know the secret recipe for how to survive a recession in business, but we do know the number one rule: 

Hope for the best, but expect the worst and prepare for it!

101 Guide How to Survive a Recession

Cash Flow

Did you know that around 80% of small businesses flop because of problems with cash flow? And that’s under normal circumstances.

In times of uncertainty like this, it’s imperative that you know your numbers. 

The first thing business owners should do is to slow down the cash outflows

  • Renegotiate your monthly rent
  • Cut unnecessary spending e.g. newspapers subscriptions,
  • Buy used or lease instead of buying new
  • Get discount on utilities or switch to cheaper providers
  • Get better terms from vendors

Next is to maximize cash inflows:

  • Offer discount for early payments to your best customers
  • Nourish customer relationships and remind them of your qualities

Inventory

Remember that during crises customers act and spend differently. They too have put a recession strategy in action and have to prioritize. Observe and identify these shifts, and then adequately adapt your inventory. For example, you can reduce the inventory in stock or ask the supplier for more frequent deliveries of lesser quantity. Furthermore, if necessary, you should consider drop-shipping or finding a supplier with lower prices.

Staff

Layoffs should be your last option, and as a business owner, it’s your duty to give your best and keep your team intact. Put yourself in their shoes and remember they have their own lives, expenses, mortgages, and problems.

Instead, for the sake of finances and productivity, you can try reducing work hours. If you cut back on salaries, employees would be demoralized and unmotivated. However, if you reduce work hours, it wouldn’t have such a bad impact.

Moreover, you ought to know that if it ever comes down to cutting off paychecks, yours should be the first to cut.

Marketing

The biggest mistake you could do in times of recession is to stop all marketing activities. Unless, of course, you want to do a business suicide.

In like manner, experts even advise upscaling your marketing, especially online i.e. digital marketing. Why? Like we mentioned above, customers are no longer acting the usual way and they’re looking for new products or services that will fit in their newly adopted recession strategy. 

Put your name out there, louder than ever, and keep an eagle eye on new buying habits and trends. After all, it’s so easy nowadays to promote your business from home.

Marketing

History shows us that most of the business that failed during past recessions was because they thought they could navigate out of the storm on their own. You can’t and you shouldn’t.

“Two heads are always better than one.”

Stick together with other businesses. Don’t be ashamed to ask for help. Exchange ideas and experiences. Support each other: intellectually, morally, financially, emotionally. 

“The lone wolf dies but the pack survives.”

If you think this is nonsense in times of social distancing, think again. You’re always forgetting the perks of digitalisation.

Nowadays, you can easily network with other enterprises from the comfort of your bed. One way to do so is by joining the online business club, Enterprise League, where you can hang out with businesses from all around the world.

We mentioned rule number one for surviving an economic recession above, so here is number two:

Keep your head cold and your mind open.

Every hardship is an opportunity for growth.

More must-read stories from Enterprise League:

Create your company page. Discover opportunities. Seize businesses deals.

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