In the current climate of economic uncertainty and declining growth, many businesses are no doubt wondering if they’ve got the staying power to survive a recession. However, there’s no need to panic, our top ten tips will not only show you how to survive a recession but prosper as well!
1. Control systems– As owner manager, you should know what is going on at all times. Keep other relevant parties informed. Seek help to get accounting systems working as required.
2. Monitor break even– If necessary strip out fixed costs. If your business has been running for some time look back to previous experiences.
3. Pragmatic sales targets– Set targets within reasonable capabilities and respect the dictates of the market.
4. Don’t cut margins– Go for profits… and cash. When prices are increased demand is choked off, profits go up and working capital needs go down.
5. Maximise borrowings– Seek funding while the going remains good. Don’t expect miracles when times are hard.
6. Manage the balance sheet– When cash is tight, manage the balance sheet rather than the profit and loss account. Be ready to dispose of assets.
7. Don’t expect risk capital– In most cases, third party investors will rather let a business fail and pick up the pieces.
8. Prepare to provide funds– Be ready to support your businesses while losses are made and until profits return.
9. Plan the downturn– As a business, it is better to stick to what you know. Don’t take risks by trying new ideas at this time.
10. Enjoy it!– Don’t let the thought of a recession get you down. It is the opportunity to review performance and focus on core activities and be ready for the upturn.