OK, We Are In A Recession, What Should You Do Right Now?
It’s official. The economy is in a recession. What this means is that business in general will be hurt and that your business will likely be negatively affected. We’ve already seen the effect in the housing market, the automobile industry, lending terms and the stock market among others.
Usually in a recession, things get worse before they get better.
This economic environment is likely to last for a while so we’re probably just seeing the tip of the iceberg at this time. In recessions, unemployment increases and both consumer and business spending decline. Money gets tight. People tend to hoard cash and pay bills more slowly. Business failures escalate the longer a recession lasts. Gloom and doom becomes prevalent.
You need to make plans for your business to survive. There’s no better time to get started than right now if you haven’t already. Here’s a short list off what you can do.
Get Out of Debt
Debt is like added weight to a sinking ship, it causes a business to go under when times get rough. If you can’t get completely out of debt, get rid of as much debt as you can. If you wait, it may be too late. Do this quickly!
If your revenue shrinks, so will your profits. The only solution is to cut your business expenses as far as you can without affecting sales. This may be the only thing that you can do if you hope to stay in business for the long-term. Do it now! Don’t wait!
Tough economic times are not when you should be delegating the running of your business to someone else. They’re times for you to become pro-active in the daily activities of your business. Stay on top of what is going on so you can make adjustments quickly.
Stay Close to Your Customers
This is a time when you really have to be in close contact with your customers for many reasons, not the least of which is to understand what is going on in the market and to be swift in meeting the changing needs that will arise.
Keep Your Credit Tight
This is a time when you have to maximize your cash flow and make it positive. It is also a time of danger since weak companies will fail. Emphasize collecting your accounts receivable as quickly as possible. Review the credit terms and status of each of your customers so that you can minimize the risk of not getting paid.
Keep as Liquid as Possible
In tough times cash is king. If you stay liquid, your business won’t fail even if it gets hurt. Think of your business as an investment and be in it for the long-term even if it means cutting back on your own lifestyle.