Easing Your Business Out Of Recession
Spring is the time of year that many business owners start to make their financial resolutions. Predictions are forecasted, and profits are scrutinised, all in the hope of making the next year as successful as possible. Although the the economic recovery is still a reality for many business owners, there’s a few positive steps that can be made to help ease the worries of recession:
Managing Cash Flow
Firstly, make a resolution to hold more cash in hand for paying bills and taking car of untoward emergencies. When the economy is slowly recovering, it makes sense to have a good cash cushion. This practice is know as liquidity, and it allows the business to pay any short-term obligations straight away. If possible, it pays to hold at least 20% of your profits in hand, especially in times of recession. Make sure it’s no more than that though, or you’ll lose out on the interest you could have accrued from investing.
Buying New Equipment
When the economy seems to be easing out of a recession, you may be tempted to go all-out for new equipment, in a bid to increase your company’s productivity.
This is usually a good idea during a normal year, but in stressful periods it’s better to use existing assets and to not go crazy buying into new ones. You can be a little more creative in re-branding existing products and avoid making expensive investments in tooling and equipment.
Make use of new technology that can help you become more productive at a lesser initial outlay.
Cost Cutting Strategies
After a recession, your sales are sure to be a little flat, or at best they’re rising marginally. If this is the case, it’s important to try and streamline the business and to cut costs. This doesn’t mean that you go on a massive staff layoff, but it does pay to keep new employee hiring to a minimum. You might even opt for hiring temporary employees for smaller projects.
Financial recruitment might be necessary for taking care of your accounts and business plans, and hopefully these temporary employees can turn into permanent ones once the business starts picking up.
There are a myriad of other cost cutting strategies too: From reducing internet and phone costs, through to removing your listings from traditional newspaper advertising and trying out something newer and cheaper. Look through every item that’s purchased and every payroll database and eliminate all possible wastage to cut down on unnecessary expenses.
Recession – An Opportunity
If you can create a clear business strategy and demand higher performance levels from your employees, you’re going to increase productivity. Motivate your staff and recruit new employees who are aligned with your vision. Listen to innovative ideas from your employees and benefit from the collective knowledge of the whole team.
Recession is a great opportunity for many businesses to make corrections to their strategy and sharpen their cost cutting processes. Observe your competitors carefully and always remember that after every recession, there’s always a recovery. The businesses that are able to chart their way through stressful periods and keep an eye on the future will always enjoy the rewards.
By Harry Price
Harry Price is a freelance writer and entrepreneur. He enjoys giving back and volunteering at his local charities.