Recession strikes the United States roughly once every 10 years and delivers a lethal blow, particularly to the startups and small businesses. No one can predict the exact timing or the length of a recession. Currently, the coronavirus pandemic is already wreaking havoc on businesses of all sizes.
During these tough times, buyers disappear, many of your clients will cut their budgets, downsize or discontinue several services or products that they use. Small businesses which survive this downturn are the ones who certainly experience an exponential growth once the economy starts to turn around. Since many of your competitors will bundle up during the recession, it creates a huge vacuum when the demand starts to pick up again. Therefore, recession can actually be an opportunity for growth for those who sail through these rough seas.
- Hire a Debt Collection Agency to recover money from unpaid bills of customers who you have already serviced. This should be done quickly because of the financial condition of most people starts to incrementally-deteriorate as time passes by.
- Accumulate or secure enough working capital, set up a cash flow planner. Best time to secure financing is before a downturn hits, plan in advance.
- Hold daily scrums (short group meetings), let everyone speak up what they did and plan to do in the following days. This also helps to boost the productivity of employees.
- Reducing headcount should be done judiciously. In-fact you can hire the top talent who has been laid off from your competitors.
- Take your accounts receivable very seriously, hire a Debt Collections Agency. People are less likely to pay if the recession prolongs, so act quickly and shorten your receivables cycle. Instead of waiting 90 days, transfer accounts to collections after 60 days after the payment was due.
- Maintain or improve your credit rating. Small business loans are often among the first to disappear during a recession. Use debt or lines of credit very sensibly. Curb non-essential spending.
- Do not fire your marketing staff. They are your wings. Trim if really needed. Look for low-cost marketing options like digital marketing.
- Keep communicating with your customers. Their requirements might have changed versus a year back. Instead of reducing the price of your product, throw in more features. This is the time to offer more not less. Additionally, keep your clients informed of your other products and services.
- Start a business referral policy with your existing clients, reward them when you succeed in winning that customer.
- Go above and beyond, which may include courtesy calls to your clients. In good times a client is like your business partner, but during hard times he is your God.
- Expand internationally if you can. Last recession (Great recession of 2008-2010) impacted USA severely but was not so bad for many foreign countries.
- Delay unnecessary purchases like new laptops or furniture. Think about ways to reduce inventory costs.
- Negotiate concessions from your own service providers and suppliers. They don’t want to lose you either during a recession. Can you get the same item or service for a better price?
- Prepare for better times. Have a strategy to scale up when new orders pick up.
- Sometimes during the recession, the damage happens from inside by ill-informed employees spread negative news about your company to other employees and customers. If things are under control and you have a proper plan and vision, then share it with your employees so that they think and talk positively about the company.
- Diversify your services and product in good times, so that entire business is not impacted adversely. But during the recession, focus more only on your core business expertise and those areas which are most profitable.
If you are looking for a Collection Agency to assist with your accounts receivable: Contact us