Running a successful business is in itself a daunting task for many in this highly competitive market environment. So, what would be the case, if the situations are far from ideal and you are given the responsibility to manage a business during recession. With the economic activity in a stagnant state, even world leaders find it hard to steer their countries to relatively stable waters and escape the brunt of the hit. With that being the case, running a business during recession is an uphill task for business owners and to ride this storm and come out victorious, businesses should need meticulous planning and discipline. The last notable recession which was called the great recession started out in 2007 and came to an end in 2009. This economic phenomenon affected various countries across the globe and marked the end of numerous business organizations throughout the globe.
The global economy is moving through a similar phase now due to the covid19 outbreak and recent estimate suggests that the global per capita GDP will witness a decline of 6.2 percent. This makes it the worst recession that the global economy has faced since 1945-46. With companies bracing for the worst, business owners are working round the clock to ensure the safety of their businesses. Even with this being the case, there are certain measures that will help entrepreneurs to increase their chances of survival. Some of those steps include:
- Analysing the Debt: It is somewhat of a guarantee that during the recession, companies will face a decline in their revenue. Most companies currently use some kind of debt to run their business and with the inflow of cash getting weaker and weaker, businesses might find it hard to repay their debt. So, it is important to have a clear understanding of your debt and take corrective measures to eliminate excessive debt as effectively as possible. Reducing your debt will make a massive difference when it comes to your company’s survival rate during the recession.
- Cutting Down Expenses: This is a no brainer and companies that can run a tight ship during the recession have higher chances of coming out of it. Businesses should start focusing on turning stagnant assets and inventories to liquid cash so that the company is prepared to face the recession. Organizations should take actions to slash their expense at any cost and save money so that the day to day operations of the business and the payment of unavoidable expenses are done promptly. Also, reduce the number of accumulated slow running inventory as this can help the company to free up some cash for other important things.
- Keep Track of your Cash Flows:Companies should always routinely check their income and expenses to operate much more efficiently and during the time of a recession this tracking is even more important. Assessing the cash flows will also help the company to better manage and utilize their assets and liabilities. By doing this, business owners will be able to cut down unwanted slack and streamline their operations and better prepare themselves to deal with the recession.
- Keeping your Customers Satisfied: Consumer spending makes up a large portion of the economy of various countries and companies should give ample importance to not cutting down on the quality of their products or services to balance their books during a recession. This is one false move, that many business owners lean towards and losing your customer base will more or less guarantee the end of that business especially during a recession. So, business owners should not compromise on the quality of their offerings or customer support services and instead, they should concentrate on satisfying the needs and wants of their customers.
While managing a business during a recession is no one’s top priority, that is the reality for businesses across the globe. By combining these above-mentioned steps with better decision making and planning, your business will have a better chance of survival in the tough economic landscape during the recession.