How to Survive a Recession in Business
Recessions can hit hard for businesses and individuals alike. The ability to weather a recession -- professionally speaking -- consists of getting back to the basics of business. It is important to be confident in your product or service, competitive with your rates and simple in your approach to operations. Keeping it simple will ensure that your business is among the lucky few that survive recession conditions.
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Weigh each decision carefully and thoughtfully before you make any major business moves during a recession. Stay calm and level-headed. Don't assume that you need to lay off employees, cut advertising and drive down prices on your products or services right away. While some of this might come to fruition, take your time in the decision-making process.
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Compete with other businesses in your industry in terms of pricing and special offers. For example, you might offer deeply discounted -- up to 75 percent for older products -- clearance areas for some store products to appeal to the recession-era customer. Because consumers try to hold on to every extra penny during a recession, show them that not only do they need your product or service, but they can afford it. Take your promotions a step further with buy one-get one -- or even buy one-get two -- offers and free shipping or delivery. Consider a lay-away program that allows customers to pay for products in increments. It is important to take any promotional efforts geared to save your customers money and amp them up during a recession. The idea behind each promotion is to get customers into your store, so your business continues to thrive.
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Conduct layoffs strategically. During a recession, businesses must sometimes let go of non-essential staff to save money. If you must lay off employees, do so in a way that does not come back to bite your business later. Retain those positions that earn your business money as well as those that help it to run efficiently. Target those positions that can be easily absorbed into others without much disruption. An example of this could be marketing assistant responsibilities that could be absorbed into a marketing manager position.
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Cut your expenses to absolute necessities in a recession environment. Any way you can save money helps you to build up a cash cushion in the event that customer traffic slacks off. Examples of extreme cost-cutting ideas for business include the elimination of all non-essential travel in exchange for web and phone conferencing and the elimination of costly phone lines in exchange for VoIP (Voice Over Internet Protocol) phone technology, which has lower call rates and free computer-to-computer calls, according to Gaebler.com. Business owners also should monitor each and every purchase made with company funds, examining statements line-by-line.
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Build up a solid cache of cash. Because credit becomes restricted during a recession, businesses that rely solely on it find themselves in a bind. Use your credit in the beginning to stack up your cash reserves. Should the recession get even deeper, your cash reserves might be the component that saves your business.
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