Five Business Survival Tips During Recession
Economic difficulties are prevalent and no one is being spared. Everyone is feeling the ill effects of current market conditions. The housing market and oil prices skyrocketed countless times over the past several months. Most feel that the situation could get worse by 2009. Whether you are an employee or a top-ranking business leader, bare in mind that you may be unable to prevent recession from taking over for a while, but you are always able to look for ways to get by and stay sane long enough to see a brighter time. Here are some tips that can help you keep your boat afloat as you sail past that economic storm.
- Tap emergency fund and not the fixed expenses allotment. College economic courses have taught you well enough that economies go through cycles of expansion and contraction. Theories however, are a lot easier to learn. Living actual business circumstances especially the agonizing ones, is another matter altogether. Economic depressions are both real and painful; anyone involved in business has to live though it. Start with accepting and managing that expectation and you have solved half the dilemma. Business people who understand that difficult economic events do happen allow for padding that they can touch when hard times come. In other words, these people prepare and are not rattled easily by news of contractions. Cutting corners is always an option though one has to be extremely careful in deciding which is fat and which is muscle.
- Maintain (if unable to increase) your marketing dollars. Marketing expenses should be a fixed expense. Just like what oxygen is to your body, marketing is your business’s way to grow and expand. No matter what happens, decide against cutting marketing budgets. Slow market times are the best times to buy shares in their lowest prices while preserving the shares’ potential payoffs in the future.
- Continue to give and upgrade the best possible product or service you could give to your loyal consumers. Cutting back on spending which could mean either lesser transactions or smaller purchases (or both) are oftentimes a customer’s answer to difficult times as a way to save every possible penny. Give your regulars good reasons (superior quality, excellent customer service, etc.) why they should cut back on everything else but your business.
- Lower prices instead of giving discounts. If you believe that giving discounts will keep your business going, think again. Discounting your products whether in good times or bad, gives consumers the impression of inferior quality. In the 1990’s, McDonalds and Burger King placed their Big Macs and Whoppers on sale, and without intent, they trained their customers to never pay for the full price. The margin problem took years to recuperate. The same thing could happen to your business. If you must, lower the price instead of giving and saying the” d” word.
- Ward off nervous ticks by setting a clear direction and expectation among your employees. Whether or not you tell your people about the bad times, they are bound to know because the news is delivered to them in a very personal manner each day when they buy food from the grocery or when they pay for gas. The best thing that can be done is to come clean and talk to your employees openly about the situation. Educate them in terms of where the company is and what the plan will be. This will help alleviate their fear of the unknown and as a result allow them to continue performing, as they should.
Most importantly, despite the increasing prices of almost everything, remember that humans have needs and will always have to spend on their basic necessities, good times or bad. The only difference between the good and bad times is that it is during an economic crunch that consumers become more critical in letting go of their dollars. Only those who offer the best quality in products and services at the right price can thrive in and survive the neck-to-neck competition.