Running a business during an economic recession can be challenging, but with structured planning you can steer your business towards success even in tumultuous times.
In this blog, the third in our sure up your revenue series, we explore four ways in which you can prepare and guide your business through a recession.
- Assess the current landscape
- Strengthen your financial position
- Enhance Operational Efficiency
- Be adaptable and agile
1. Assess the current landscape
Analyse the economic climate and its potential impact on your industry. Evaluate consumer behaviour, market trends and your market position, along with the financial health of both your own business and that of your competitors. This assessment will provide valuable insights into the challenges and opportunities you’re facing, allowing you to adapt your business strategies accordingly.
2. Strengthen your financial position
Maintaining a strong financial foundation is crucial. Focus on reducing unnecessary expenses, optimizing cash flow, and improving profitability. Consider renegotiating better deals with your suppliers, diversifying revenue streams, reviewing resourcing and employee levels and look at where you may be able to save without compromising quality or service.
Additionally, build an emergency fund to cushion potential setbacks and secure access to capital through strategic partnerships or alternative funding sources.
3. Enhance Operational Efficiency
Streamline your operations by identifying inefficiencies and implementing lean practices. Automate repetitive tasks, optimize supply chain and inventory management, and explore outsourcing options to reduce costs and improve productivity. Cross-train employees to enhance flexibility and promote innovation and creativity within your workforce to stay ahead of the curve.
4. Be adaptable and agile
Given the uncertain nature of a recession, flexibility is key. Set goals that encourage adaptability and the ability to pivot quickly. Embrace innovation and explore new ways to deliver value to your customers. Be open to pivoting your business model or exploring new markets and customer segments that may be more resilient to economic downturns.
Consider collaboration with other businesses which can lead to mutually beneficial opportunities. Explore partnerships, joint ventures, or strategic alliances that leverage shared resources and expertise.
One of the hardest roles you will play as a business owner will be that of guiding your business through a recession. There are tough decisions to make, and they need to be made early. If you’re unsure or need help please come and talk to Pathfinder Solutions about how we can work together towards your even more successful business future.
Check out our other blogs in this series.
Margin trumps marketing – before you bring on more work, make sure the work you already have is at an industry standard margin. If the work you’re already doing isnt making you enough money, the problem is unlikely to be marketing but rather it could be margin.
Get cash confidence – if there is ever a time you should be regularly focussing on your cash position, that time is right now!
Cashflow (not cash) is king. This means it’s not about how much cash you have in the bank today, or tomorrow. It’s about when cash is arriving in your account, when cash is departing from your account, and whether the cash remaining is a positive or a negative number.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.