Top 10 Business Survival Tactics

 
During times of recession some businesses have what it takes to weather the storm of uncertainty and are able to adapt and maintain their presence in the market, while others don’t. Tough times call for a re-examination of fundamental business principles which on the surface may seem obvious, but are often overlooked. The following back-to-basics suggestions can aid you as you recession proof your business.

1. Cash flow is king.

As a business owner, you must know how your cash flows. This isn’t fancy accounting; it’s simply tracking how cash comes in versus how it goes out. Be sure to get a grasp of this monetary movement.

2. Trim the fat.

When cash flow is good, “fat” tends to accumulate. Now is the time to look at where your money is going and eliminate unnecessary items. It’s critical that you get your cash outflows to a manageable level.

3. Look into the future.

When clients and projects were rolling, most people believed new business would materialize whenever things temporarily slowed down. At least for the time being, those times are gone. Analyze what money is coming in;
specifically from where and when. Compare this to your cash outflows. If more is going out than coming in, trim more and find additional income. Do this exercise each month, always looking at least three months out. Also, prepare a worst-case, 12-month cash flow scenario. Assume a 10% to 20% drop in revenues and identify what changes you would make and when. Many times it is too late for recovery once a dramatic drop in financials is discovered.

4. Keep an eye on long-term goals and objectives.

Every decision, every cutback, every improvement you make must be beneficial both now and in the future. Many companies regret hasty decisions after they react by cutting prices, firing employees, eliminating marketing, etc. Do not plan for the short-term, plan for the inevitable upturn.

5. Get back to basics.

When you first went into business, you may have had to fight and claw to make ends meet. Make a list of the things you did back then to bring in revenue. You probably moved away from many of those strategies when business improved. This is the time to aggressively return to those approaches, if appropriate.

6. Keep emergency cash reserves.

If you have any money right now, create an emergency fund that equals one, two or three months of your cash outflows. Put this in an account and don’t use it unless it’s life or death for the business. This provides a cushion just in case something bad comes along at the worst possible time. If you don’t have cash now, do everything you can to build up such a reserve.

7. Bank on it.

If you’re having trouble keeping up with your obligations, keep the lines of communication open with your banker. Develop and share a concrete plan for getting cash flows back in shape. Create the basics for the plan and ask your CPA and other advisors for their input. Once it’s complete, communicate with your banker clearly, and ask for help implementing the plan. If it’s a quality financial institution, they’ll want to see you make it and help you any way they can.

8. The customer is always right.

Ensure that you are providing your customers with the highest level of customer service to protect prices and present new reasons for them to remain loyal. During a recession the customer's buying habits will change. You need to show your customer that you understand that economic times are hard and provide them with solutions that address their problems or concerns. Although you want new business, it’s imperative you keep your existing ones. Your competition is desperate, and they may try anything to get your customers. Create the best experience possible for every customer that walks through your door, calls you on the phone or otherwise comes in contact with your business. Call your clients yourself, ask them how they’re doing, and if there’s anything you can do to help them out. Ask if they’re happy with your service and how it can be even better going forward.

9. Stay on the Growth Trail.

When the future is uncertain, it can be tempting to just "batten down the hatches" and try to "ride out the storm." Too often, companies cut back on new products or services that represent the future of their business. Then once the upturn arrives they find they cannot catch up with the market's expectations and demands. Do not cut back on business development or product development budgets - keep your products or services current and creative.

10. Diversify

With the market in a recession, one of the best things that you can do to ensure financial success is to become more diversified. You can do this by looking for ways that you can sell complimentary or supplementary products. If additional products are not a possibility, then invest your time in enhancing the usability of the main product by offering repair services, warranties, etc. You may even consider opening a completely new line of products or services that fulfill a specific need that may exist because of the recession. Remember that the more services you can offer, the more clients you will be able to find. In addition to creating new products you can diversify even further by repackaging your product and selling it to a different clientele. Although you may be very comfortable in a certain market niche, a recession is no time to remain un-changed. You may have had the competitive advantage before, but unless you diversify along with your competitors, you will be left in their dust.


Since the information contained herein is of a general and summary nature, no final conclusion should be made without further review. For additional information, please contact us at 847-267-9600