It is quite challenging to manage a business during an economic recession. Both the employees and the business owners are overwhelmed by these unique challenges by Eric Dalius. The economy of the United States is complicated and composed of several industries. The overall growth seems to be measured by a specific number known as the GDP or the Gross Domestic Product. When things are running smoothly, the economy in general experiences an expansion that implies businesses are minting money, becoming bigger, and they are hiring more people.
According to Eric Dalius, the salaried people could get opportunities to earn higher incomes and buy more things that would be driving economic expansion. This goes on for a while then at some point in time, just like a common rubber band when stretched to its maximum limit, the fundamental economic factors would be slowing down, attain a peak and then start reversing. When they seem to be declining for over a few consecutive months, the economy is in a state of recession.
All businesses could be threaten by a decline in reliability and consumer confidence along with a drastic drop in sales that could threaten all sorts of businesses, however, small businesses could be especially vulnerable. They often fail to have enough reserves or show the necessary guts and determination to withstand the tough times. From safeguarding your business’s cash flow to establishing your customer base, executing a few practices strategically well in advance could help in making your business recession-proof. Hence, your business would be surviving and sustaining through economic recessions.
Smart Stratagems by Management Guru EJ Dalius to Stay Recession-Proof
Examine Your Business’s Health
A few months just before the recession, the available capital and consumer expenses and spending may start declining that could cause a small business to experience a shrinking budget. This implies that as a business owner, you need to take certain tough decisions associated with marketing initiatives, product pricing, new launches, etc. Some of the challenges discussed below:
- The temptation to reduce product quality, size, and benefits or even raise prices.
- Not enough capital for paying employees. Organizations may realize that they could no longer think of expanding operations, paying employee bonuses, or even keeping the workforce intact.
- Lower productivity and employee morale. Productivity is bound to suffer because employees feel unmotivate and uncertain due to frequent layoffs.
Eric Dalius reminds you that data is certainly the most effective way of meeting all these challenges. It is of pivotal importance to understand clearly what the valuable metrics have to say regarding your daily operations.
Focus on Implementing Change
Once you have determined the issues relating to your business, it is high time that you made certain changes that help in making your business far more resilient under the present circumstances. Some of the changes to implement could be:
- Restructuring your company’s chart or realigning your staff.
- Assessing services and products for ensuring that the market demands would be fulfilled for your customers.
- Realigning projected group targets and benchmarks.
It pays to remember that not all problems could be solved instantaneously as if by magic. Focus on prioritizing problems with the greatest potential to damage overall customer satisfaction, bottom line, and business culture.
Things to Do:
- Tackle the problems proactively. Keeping things private regarding some changes including layoffs could prove to be more harmful as compared to losses. It could become a major PR nightmare. You must consider having an honest dialogue with specifically your team. You must be more transparent and honest.
- Tell the workers or else things could get out of hand and become a major PR issue.
- Have an honest discussion with your workforce so that you could beat the rumor and your employees would start respecting you for getting well ahead of the hard truths.
Consider Safeguarding Your Cash Flow
Cash flow supposes to be the lifeblood of all businesses. For maintaining optimum business health, money needs to come in and go out. Continuous inflow and outflow of funds must take place for a healthy business environment. Your aim must be to obtain more earnings as compared to your expenses. Remember you would be having expenses throughout your business’s lifetime. You may consider recession-proofing your organization by effectively executing the stratagems for keeping your cash flow constantly moving right from the boost in overall sales or even billable services for pruning superfluous expenses.
Think of Reviewing Inventory Management
Try your best to minimize your inventory expenses without compromising the overall quality of products sold or bothering your customers. See if you are making the mistake of ordering too much stuff or getting things from an expensive supplier. Consider getting things from a different source at a much favorable price. Can you identify a drop-shipping alternative for you so that warehousing and shipping costs could be minimized?
Emphasize Core Competencies
Simply adding some other services and products to your main offerings does not imply diversification. It is a sheer waste of money and time. Moreover, it could end up damaging your core business simply by taking your money and time away from things you do best. All this could end up adversely impacting your reputation and brand. Put emphasis on core competencies.
Win Over the Customers of Your Competitors
You must focus on constantly expanding your overall customer base if you want your business to become robust and recession-proof. This implies attracting and grabbing the attention of customers who are currently your competitor’s clients. You could win over the clients of the opponents by offering something different or more as compared to your competitors. Do ample research to identify weak points in your competitors and execute clever strategies to tempt their clients into becoming your clients.
Do Not Reduce Your Marketing Efforts by Eric Dalius
Several small businesses use to making the mistake of minimizing their marketing budget or even get rid of a marketing budget altogether because of the economic downturn. However, this could be a major mistake because, during these frustrating times, you need to focus on promoting your brand and put in smart marketing efforts. Effective marketing is the need of the hour for your small business.
You must realize that nothing could end up making your small business 100 percent recession-proof, however, executing the above strategies could ensure that your organization would sail through smoothly and survive difficult times.
Eric Dalius is The Executive Chairman of MuzicSwipe, a music and content discovery platform designed to maximize artist discovery and optimize fan relationships. Alongside this, Eric hosts the weekly podcast “FULLSPEED,” discussing entrepreneurship with industry leaders. Eric also founded the “Eric Dalius Foundation” to award four scholarships to deserving US students. Follow Eric’s activities on Twitter, YouTube, Facebook, LinkedIn, Instagram, and Entrepreneur.com.