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How to Protect Your Business During a Recession
By James D. Foster, Ph.D.
A recession's impact not only has devastating effects on households, but it can harm businesses as well. Learn about the effects of an economic downturn and use them to prevent your business from succumbing to a recession's deadly claws. Here are some subjects to think about.
1. Customer Scarcity
When your customer bases shrinks, your income suffers as a result. Rising prices produce picky customers who are less interested in giving you their business. Existing customers might also re-assess their spending, which could result in fewer orders from your company. So what do you do? Try changing your customer acquisition techniques. Online marketing might be a way to go. It might not be suitable for all businesses, but there's no harm in considering it. Online marketing exists in many forms, and doing your assignment will be helpful in determining which technique will be most beneficial to your business.
2. Large amounts of credit card debt
Inflation is a usual byproduct of a down turn which means higher costs on essential business elements. If you've been making the majority of your payments with credit cards, you need to pay special attention to your spending. If you don't keep track of it, you could be surprised one day when you find yourself struggling to pay your bills. You do not want to get in trouble with credit card companies, as a low credit rating will negatively impact your ability to obtain approval for loans.
3. Increase in utility costs
The rising price of food, electricity, and gas can put a big dent in your business. This is especially true when running your business out of a physical location such as an office, as the increase in utilities and rent can take a bite out of your revenue. So how do you resolve this? Try being more efficient in your utility spending.
There are so many ways to save money on utilities. One is to cut back on non-essential costs. If you don't need to have your air conditioning on full blast, turn it off. If you can operate without have as many lights on or having them on as long, turn them off. If you can utilize less expensive packaging methods or materials, take advantage of the cheaper alternatives. Re-assess every aspect of your business. Take a closer look at your books to find deductions and lessen your costs in any way possible. And make the most of technology; automate your business wherever you can. You can also hire virtual workers on a contract basis, allowing you more time and energy to be productive and brainstorm ideas on how to improve your business.
4. Funds availability
If you needed a loan to start your business, you might run out of savings to fall back on to withstand the recession. To control this, devise a suitable savings plan to store some of your income. By creating this nest egg, you have a bit of a fallback for when an economic downturn happens.
5. Low staff morale
Slow periods can diminish the attitude and morale of employees. Why not create incentive sand contests to boost the morale of your sales team? This is the perfect time to get creative and find ways to inspire your employees. Don't be stingy with incentives and praise; go out of your way to create excitement.
Have you felt any of these effects yet? If you have, there's no time better than now to try some of these suggestions and find a way to fight your way through the recession.
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