While the economic downturn paints a scary picture, it doesn’t have to be a frightening scenario. Taking the lessons from the previous recession could help an organization plan better and stay resilient during the downturn.
Planning plays a crucial role when fighting the impending downturn and a business strategist with a planned business strategy framework can help you stay afloat during the difficult times. She will also be able to help you stay resilient with her tried and tested strategies to fight a recession.
For organizations to stay afloat during recession then they need to prepare well in advance; more so when the economy is healthy and thriving. As the saying goes in the lending circles – the best time to borrow money is when you don’t need it. Implying that borrow money when things are going well.
The same is true for business planning as well, as your business strategist will tell you – the best time to prepare for a recession is when the economy is thriving and strong. Based on the above statement, she will prepare a business strategy framework with five basic strategies that will help you tide you over any impending economic downturn.
So what are those strategies that have helped businesses to stay resilient during the recession? Without further ado, let’s have a look at those strategies.
- In order to survive a recession, you will have to ensure that your revenue is diversified and not dependent on one client. You need to ensure that you have various small clients along with one or two bigwigs in your kitty if you wish to have a decent cash flow during a recession.
- While spending wisely should be a part of your organization’s everyday routine and it will definitely help if expenses are planned during the impending recession. If you can reduce your unnecessary expenses as the recession looms you will be able to create a cash reserve that will help you stay afloat during the downturn.
- You need to stow away some cash for future emergencies including recession. One way to do this is by building a cash reserve. It is important for every business to have a cash reserve and you can only build a cash reserve when the economy is healthy. This is also an important part of preparing for recession and also surviving it. Interestingly, while building a cash reserve is fairly simple, it is not as simple as it sounds. You need to divert some cash into the account. Now the hard part is to leave the account until an emergency strikes.
- Keep a stock of your inventory and ensure to have a lean inventory, which essentially means that you need to take a stock of all the unprofitable products and services. Once you know what services and products are not performing for you, you need to drop them like a hot potato.
- Last but definitely not least you need to manage your debts. Debts have a tendency to compound quickly when the purse strings are tightened, so pay them when you have cash. It is also important to manage your debt at a relational level meaning keep a stock of what you owe to your vendors and what your clients owe you.