Take these business survival measures to insulate your company in the event of an unexpected downturn.
Maximize Your Cash Holdings
Remember that cash is king, and with it you can pay your suppliers and the bank. A quick way to boost your cash reserves is to sell off surplus inventory and then cut back your inventory orders until the situation improves. You can also push to improve your accounts receivables collection.
Your infrastructure may allow you to quickly start selling alternative products that are unaffected by adverse market conditions. For example, during Prohibition, Anheuser-Busch Inc. sold malt syrup and a non-alcoholic beverage. When the ban on alcohol was lifted in 1933, the company had the resources in play to begin producing beer again.
If you can afford to do so, a slowdown can be the perfect time to introduce a new product or strike a strategic partnership. Surprise your competition while they’re busy worrying about their own future.
Use Freelancers and Part-Timers
They can help build business at a lower cost because, unlike full-time workers, you typically don’t have to provide benefits like health care and you can pay them at a lower rate than full-time employees.
Focus on Service
Good customer service will always help to differentiate you from your bigger competitors. In an economic slowdown, your clients may be looking to cut costs, too. If you boost your customer service efforts toward existing clients, it’s more likely they’ll stay you with during the slowdown -- and they may even expand their business with you once things pick up again.
Look for Substitute Materials
If your business is heavily dependent on raw materials, look for less expensive, substitute goods. The savings will go straight to your bottom line.
Revise Your Revenue Projections
Use the new projections to try and renegotiate the terms of your trade credit and bank debt.
Involve Your Employees
You may be surprised that your employees are willing to help come up with ways to cut costs. But smart workers realize their job status is tied to the overall health of the business.
Don’t Abandon Development
The costliest mistake you can make during a rough period is to focus entirely on cutting costs to survive and abandon product development. New products can help differentiate you in a tough market. Also, when the market improves, you don’t want to be caught with an empty development pipeline.