The U.S. economy has been mostly positive over the last decade. Consequently, businesses have been mainly doing well during this timeframe. However, historical data reveals that the economy is cyclic in nature, with both upswings and downswings. Therefore, the good times will likely come to an end sooner or later. While both large and small businesses can suffer the effects of an economic downturn, the latter are generally more vulnerable.
With that in mind, here are ways to help your business survive and thrive during an economic downturn:
- Pay Off Your Debt
Work toward reducing your debt so that it’s low enough for your business to survive. This way, your business will be less vulnerable if the economy slows down.
- Save Up for Emergencies
Ensure you have emergency cash reserves to fill any cash flow gaps that may emerge during an economic downturn.
- Focus on More Than Just One Customer
Always try to diversify your business. This way, you still have sales even if the recession causes you to lose some of your clients.
- Retain Your Current Customers
In addition to acquiring new customers, you may want to ensure your existing customers are satisfied with your services. Happy customers could give you referrals, helping your business grow even during the recession.
- Secure Contracts with Ongoing Work
Build your service contracts in a way that helps ensure getting future work. Ongoing work could make your business more sustainable and keep you going even if the recession makes it difficult to get new contracts.
- Provide for Your Team
Businesses often are sometimes forced to lay off staff during economic downturns. This issue may cause losing skilled employees you’ve worked hard to get and train. Working with your employees to cut costs could help ensure you don’t have to lay off some of them during a recession.
- Focus on Your Competencies
During a recession, you may feel that you have to take any work that comes your way regardless of your competencies. Handling jobs that aren’t within your areas of competence may generate unprofitable work because you may not provide the level of quality your clients want.
- Track Your Marketing Campaigns
Measure the results of your marketing efforts to find what works and what doesn’t work. If you have an effective marketing plan, you may consider not reducing your marketing efforts during a recession because that may further damage your business.
- Connect with Suppliers for Better Inventory Control
You may want to diversify your supplies and get better inventory control when the economy is doing well. Moreover, it would be best if you worked with multiple suppliers. If you rely on a single supplier, this could cause your business to be severely damaged if the supplier is unable to supply you due to an economic downturn.
For more information and resources to help your business in Ventura, Santa Barbara, or Los Angeles County thrive even during an economic downturn, contact us today at Economic Development Collaborative.