In an economic crisis, small businesses will be the ones which will suffer the most. As a business owner, when you’re running short of money or go almost bankrupt you might become anxious, fearful and panic. You will be worried about how to survive the situation for which you may be forced to make some drastic moves. You’ll need to scratch things up and position your business until you feel assured that you can survive the economic crisis.
Here are a few strategic and creative tips which can help small businesses to survive in an economic crisis:
Assess your position
You need to first understand your outflow and inflow of cash. You need to assess the timing of your bills and payments. Are there any pending payments from you to suppliers or from customers to you?
How much credit you have on hand? What are your savings so that you can sustain for some time?
Then, you need to think about how can you free up some cash? How can you cut off expenses?
Do you have a crisis plan in place or you need to make a new one?
Cost-cutting measures to start with
- Cut all unnecessary expenses.
- Ask some employees to leave or be absent for some time until you overcome the crisis. Negotiate on the payroll payment with them and what are the available payment options so that both of you can survive and incur no/nil loss.
- Sell any additional or unnecessary machines.
- Clear some old stock which means and find new ways to sell the same.
- Ask the landlord to defer the rent for a few months.
- Let go your own compensation, survive off savings, live a minimalist life.
Maintaining the cash flow
The most important secret in an economic crisis is to maintain the cash flow. At least until you start making profits, positive cash flow can hugely boost a small business owner’s morale. Here’s how you can maintain that –
- Plan to pay out cash later and receive sooner.
- Reduce some of your cash outflows like postpone payments to suppliers. Talk to them that you’ll pay partially. Cancel any minimum recurring quantity or unnecessary future orders.
- Talk to your bank to defer any monthly payment or pending payment and request them to help you by relaxing any penalties. Negotiate with your bank asking them to extend your credit time.
- Increase and speed up cash inflows. Ask all pending payments from all your clients and customers and if they could pay you at the earliest.
Take a loan
As a small business owner, apply for loans that will see you through if you can afford the loan rates. When the situation improves and your business recovers, you can pay it back over time.
The Government does offer low-interest working capital loans for small businesses that are impacted due to various reasons and business owners should research these schemes and apply for them.
Focusing on existing customers and clients
You should not lose track of your existing clients and customers. Some businesses have loyal regular customers who have to be given extra attention by serving them promptly and in better ways now. A meticulous search of a prior maintained data should give you the list of them.
A further way to attract them and maintain their loyalty so that they don’t desert you in these hard times would be by offering them suitable discounts if they work out for you.
Innovative planning to stabilize the business
Y also will have to come up with some real creative thinking during an economic crisis to stabilize your business and earn some profits. Below are some smart ways to market your business in crisis:
- As a business owner, you need to build a community who would support you in economic crisis.
- Offer free delivery to customers if it works for you. Same day home delivery would further turn attractive.
- Use telemarketing (getting orders over phone calls) aggressively since it is a very cheap way of selling.
- Encourage your workers to be more productive, work harder and take minimum leaves. Pay small incentives to them whenever you make profits.
- To advertise cost-effectively, use emails or social media platforms such as Facebook (a FB page costs nothing) or WhatsApp or create marketing blog, landing page, e-commerce page. Avoid marketing using print media or hiring on-field sales executives.
- One easy way businesses attract customers is by selling gift cards. The customers buy them now at a discount and use them later, but you get the money now when you need it the most.
- You can also sell products online if you can afford the shipment costs. While doing sales online, get the payment through online also and have a strong secure online system for transactions to avoid online frauds/hacking.