Creating a Recession-proof Business: How You Can Do It
For the past years, there have been a lot of discussions about a new recession taking place. The topic is even more intensified due to the spread of the coronavirus, leading to a great economic uncertainty affecting both small and big businesses all over the globe. Since last year, many individual workers have been laid off from their jobs, and businesses of all kinds were forced to close down.
In a nutshell, recession refers to the decline in economic activity due to a significant drop in spending. If you’re worried about your business’ stand during such times, it’s never too late to carry out some recession-proof strategies. Learn what you can do to increase your chances of riding out a possible economic storm.
- Master cash flow management
Cash flow is what keeps a business alive. To achieve good financial health for your company, it’s your job to ensure the money is outflowing and inflowing continuously. And obviously, you also need to make sure that you are bringing in more money than shelling out.
Cash flow management encompasses several strategies and practices that you must learn to master to track and improve your company’s finances properly. These may include building an emergency cash reserve, setting invoice terms and timelines, encouraging early and easy payments, and driving sales with promotions and incentives. Moreover, you should ensure that every cash flow projection is accurate, from the dates to the knowledge of upcoming cash outlays. And for the last tip, do not overspend in certain areas of your business.
- Focus on your customers
In these uncertain times, you must be laser-focused when it comes to your customers. Understand the current needs of your customers or reconnect with them. If you’re a business in the financial industry or an insurance agency, it’ll be useful to obtain a skip trace investigation service if you need help finding or contacting your clients. Aside from that, you can also carry out a precisely targeted and well-designed survey to gather insights about any changes in your customers’ purchasing behavior.
Following that, think about how you can generate more sales opportunities from your loyal customers. Do you need to make adjustments to your products and services to match their needs better? What about providing your customers with well-designed incentive programs?
- Bring in multiple revenue streams
Another effective way to make your business recession-resistant is to build multiple revenue streams. Doing so clearly allows you to maintain your income and stay flexible, preserving your business no matter what the economy is. It’s advisable to have at least seven revenue streams. To start, take inventory of your current products and services already doing great in the market.
After that, plan the need to create blueprints and resources for your customers and diversify or innovate your current offerings. Furthermore, in creating multiple revenue streams,it’s best to take a user-centric approach to avoid wasting too much time. Lastly, be sure to keep at least one revenue stream without your own control. Don’t rely on others’ performance of offerings to succeed. That one revenue stream you have full control over is your real money maker.
- Design the business to sell it
Regardless if you’re starting a small business or already running one, it’s always necessary to build it with the intent of selling. Now, that does not mean you will really need to sell it. This means that you need to successfully run the company in a way that doesn’t revolve entirely around you. A good professional and entrepreneur know that it’s essential to pay attention to your business processes and systems and whom you serve. It would be best if you also focused on what an outside investor would want to see in a business.
To give you a clear idea, would-be acquirers look for businesses with pristine and wholly transparent financial statements, had developed proven work systems, and operated with minimum wasted resources or motion. Most importantly, it is crucial to building a business with individuals or members who think and work like actual company owners. A successful company is made up of people who share in the rewards yet always take responsibility for the performance of the company.
While economic recession can be very alarming, know that you can always find ways to minimize, if not eliminate, its negative impact on your business. And during these uncertain times, there are still opportunities that can help you survive with your employees. Follow our tips and start building a recession-resistant business right now.