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Small Business Survival Tips for Tough Economic Times

By Townes Haas   |    May 7, 2020   |    8:07 AM

How to Recession-Proof Your Company

Right now, times are tough for small business owners across the world. Unlike larger companies and corporations, smaller businesses don’t always have the resources needed to weather a severe economic downturn. That doesn’t mean all hope is lost, though. 

From finding creative ways to cut costs, to winning over your competition’s customers, here's how to help your business stay afloat.

Understand your cash flow

As your business grows, analyzing the company’s cash flow becomes more and more complicated. Sales, loans, expenses, investments and more all contribute to your overall cash flow.

To survive a recession, you need a deep understanding of how cash flows in and out of your small business. When this information is readily available, it’s easier to respond to market forces that are outside of your direct control. For example, if the amount of cash flowing in has reduced dramatically, you can still cut expenses.

Brainstorm new ways to trim and control expenses

When the economy suddenly spirals downward and your company is no longer generating the same level of revenue, it’s time to think about costs. 

Here are some common (and not so common) tactics business owners can use to reduce and control costs:

  • Reduce overhead expenses. There are many ways to reduce overhead costs, from going green to opting into a virtual office membership instead of a traditional office lease. The key is to think creatively and question every expense. 
  • Rethink how you staff your team. No business owner wants to lay off employees, but dire economic straights often call for difficult decisions. Virtual assistants are an affordable and flexible staffing option, and finding the right fit is easier than you think.
  • Talk to your bank. If you don’t have enough cash to make a loan payment, have an honest conversation with your lender. You may be able to alter the payment plan. You’ll also want to ask about your company’s risk rating — if the bank opts to downgrade your loans and assign a higher rating, you could be on the hook for more money down the line. 

Consider keeping your marketing budget

When business slows down, it’s tempting to slash marketing budgets. However, this can be a short-sighted decision that leads to more trouble down the road. In many ways, your company needs marketing now more than ever.

When the economy rebounds, you want would-be customers to turn to your brand. A robust marketing campaign ensures that prospects know about your products and services, and there are plenty of low-cost ways to harness the power of marketing.

Impress the competition’s customers

If an economic downturn means you’ll have a smaller pool of prospects, think about how you can win over the competition’s customers. Ask questions like:

  • What makes your company different (and better)?
  • What do the competition’s customers like and dislike about the product or service? 
  • How does the competition market their offerings to potential customers?

As you answer these questions, you’ll stumble upon strategies and tactics that can be used to differentiate your company from the other guys. Use those learnings in your marketing campaigns, sales decks and other customer acquisition materials.

Don’t forget about existing customers

Winning over new customers takes time and resources, so don’t forget about your current customers. There are so many ways to market to people who already know and love your brand, and here are 4 Ideas for Marketing to Your Existing Customers that you can try. With any luck, you’ll be able to quickly generate enough cash to keep your business running.