Undoubtedly, there is going to be a long recession in the upcoming days. Your customers will start cutting down their expenses and it’s going to affect you badly. It is not wrong to say that small businesses like yours are often hit the hardest during a recession.
You may want to read this: 3 ways the upcoming recession in India affects your small business
So, if you’re not preparing for the upcoming recession, it is impossible for your small business to survive, and hence you’re preparing to fail.
Being a small business owner, you must make drastic changes in your business to increase cash-inflow and reduce cash-outflow which is the dead-sure way to survive an economic recession.
Let’s get started. Here’s what a small business like you should to save money and survive the upcoming economic recession:
1. Cut down your monthly rent.
Firstly, try negotiating with your landlord to lower monthly rent. Point out that it’s better for both of you if they lower your rent.
If situation demands, feel free to agree for signing a longer lease term in exchange for the lower rent if you have to. Your landlord would rather have you stay at a lower rent than to have space be vacant for months.
2. Find cheaper vendors for all your utilities.
Consider all your utilities like water supply, power, broadband, and phone network. Call your vendors’ competitors and find out if they have a better deal. Let them know you’re willing to switch vendors if they can give you better offers.
They certainly will have unadvertised discounts that they can offer new customers. All you have to do is ask for them. If it works out, call your current vendors and get them to match the offer to avoid the trouble of switching.
3. Reduce unnecessary expenses.
4. Look for the second-hand or just lease it out.
When you need a new computer or office furniture, lease it instead of buying. Opt for a second hand if it’s in good condition. This way, you can easily save a lot of money. If your business runs out of cash, it won’t matter that you paid less for that desk by paying the full amount upfront.
Let go of luxury things. Especially, in a recession impacted economy, there may be plenty of used furniture, computers and many more from recently closed businesses.
5. Delay your payables.
Having cash-in-hand is critical for your business. Talk to your vendors and see if you can get them to extend your payment due date. When they disagree, see if they will give you a small discount for paying early. You can also consider using a credit card to further extend your payables.
For example, consider you have 30 days to make payment to your vendor. Now, instead of making payment through cheque or cash or debit, pay using a credit card. Many credit cards give you 60-days terms with no interest. By doing this, you can easily extend the payment due date to 30+60 = 90 days. So, by using a credit card you’ve basically given yourself 90-day terms to pay your vendors— with absolutely no interest.
6. Collect receivables sooner.
Offer your customers a discount for paying sooner.
For Example: Give them a common discount is 1-2% OFF for paying within 10 days instead of the normal 30 days.
7. Retain your existing customers.
8. Maintain Customer-relationship
They find it harder to stop doing business with you when you’ve met face-to-face and they know you care about them the most.
9. Reduce the amount of inventory you’re holding
During an economic recession, it is recommended to not tie up too much cash in inventory? Do you really need to have 50 units of every product sitting on your shelves?
10. Reduce your “profit margin”
Your customers spend differently in an economic recession. Bring down prices to drive more demand, but see that you don’t undergo loss either.
Keeping your business in great shape during the current economic condition is difficult, but not impossible. With these steps, you can do 100% better than what you would have been doing without preparing for a recession.
What do you think? Please comment below.
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