5 Tips For Keeping Your Business Afloat In Difficult Times
No business owner ever wants their company to go through a turbulent situation. Unfortunately, unprecedented conditions can occur at any time. These include a collapsing economy, wars, and even a widespread disease outbreak resulting in a pandemic. While these catastrophic situations are out of your control, your organization is not.
You can pull your company to safety through several strategies, planning, and critical thinking. However, you must show immense courage, resilience, and flexibility to combat these troubling times. The trajectory of your business is in your hands, and even though you may be dealing with a difficult situation that no one can prepare for, there is still hope. So, to help you find your footing and enable you to recover your business, here’s what you need to do:
1. Analyze the problem
Before you start making serious decisions and changing your business model’s structure, take some time to analyze the situation. You need to get to the crux of the problem and connect its impact on your business. For example, if the economy is going through severe inflation, you should expect consumers to stop purchasing new products, which will affect your company’s profit margin. Once you get an idea of what is going on, you are in a reasonably good position to make new plans.
Depending on the crisis, you may need to fire employees, stop mass-producing new products, or collaborate with another company to find anchorage. Or even hone your business skills. The knowledge you hone will play a pivotal role in shaping a new strategy. Therefore, before any tough time hits, it is in your best interest to get a general MBA if you don’t have one already. The skills and concepts you pick up from this degree can act as a safety net and catch you when dealing with a stressful time. If you feel overwhelmed with the complexity of your situation, take a breather, think about your business’s current standing, and start planning your way from there.
2. Spread out the money
It can be hard to access your funds in a bank or get a loan during any emergency. This is true in situations where you may go through an economic recession. In such cases, if you get locked out from accessing funds temporarily, you will need to use other means of obtaining cash. So be sure you have investments, assets you can liquify such as stocks, and savings you can dip into as a last resort.
If you have the business capacity, try opening a foreign bank account. This comes in handy when your local bank account may freeze because of a national crisis. Having different channels to handle your money also helps you get a high ROI. So when you go to turn an asset into currency, you may get significant capital. Think like an accountant when handling money.
3. Don’t go overboard cutting expenses
It may seem like a smart choice to cut down all expenses related to your business and leave only selective ones. But running a business is not like managing a house. Minimalism doesn’t exist in the corporate sector. Instead, when cutting costs, you have to carefully examine what your business needs and what is no longer helpful.
For example, you can reduce the budget for marketing by following Pareto’s principle. This theory states that 80% of a business’s success stems from 20% of lucrative marketing. You don’t need expensive ad channels. Invest in social media spaces, post videos on platforms like YouTube, and make social media posts to get the word about your business out there. Pull back from spending money on expensive ads.
Any work that you can digitize should migrate to smart devices. This eliminates the need for paper and reduces document management to one medium. You can also encourage remote working to keep productivity levels high and ensure your workers can work from home. This helps you fend off paying bills to keep the office operational. However, don’t start making significant changes, selling shares, letting go of products, or throwing financial plans away. Cut costs that you can afford to let go of.
4. Review employee performance
Employee performance needs to get scrutinized heavily during a crisis. Your business may be operating on limited assets, and luxuries like keeping an extensive population of workers, even if you have no work for them, are no longer an option. You also need to cut down on employees who may cost less but bring minimal productivity.
Therefore review employee performance over different quarters. Workers who bring in business in exchange for a handsome salary can stay. At the same time, employees who show innovation can also continue working for you. But, employees with too many absences, lack of productivity, and simply filling a space on the meeting table need to go. Downgrading your total staff capacity is a risk, but it allows you to pool talent and work on keeping your business model on a steady track, even if you gave five workers.
5. Maintain quality
During a difficult time, you may feel the need to use cheaper raw materials and continue mass-producing. While cost-effective and low-grade raw materials may significantly reduce your expenses, they will also drive away consumers. Your company is known for the line of products it produces. Suppose you start changing the line and give out low-quality goods in exchange for the same price. You are now ripping off your consumers.
So ensure you maintain the quantity and continue getting material from reliable suppliers. You also don’t need to worry about launching a new item. Stick to the ones already in the market and sell them at a reasonable rate. You may want to hold sales and use them to get more consumers to look your way and purchase goods without needing to bring new products out.
Difficult periods have no timeline. These situations can start unexpectedly but leave lasting damages to your company. However, as a business owner, you need to know how to ride the waves no matter how hard the challenge. But to emerge successfully, you need to be strategic. Ensure you understand the magnitude of the problem and can relate it to your company. When managing finances, don’t get rid of everything.
You may need to spend some time on your employees and figure out who is an asset and who needs to go. Never compromise on quality and continue your standards, even if it means limited production. Cheap goods can turn even loyal consumers away. Finally, maintain a steady cash flow by ensuring you pour your money into different channels instead of sticking to one method. This allows you to extract money when you most need it.