How to Strengthen Your Business During an Economic Downturn

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business meeting

The COVID-19 pandemic had revealed all the downsides of the global economy. As businesses started to temporarily close due to lockdowns, it became important for businesses to show strength when facing an economic downturn.

However, if you are able to keep your business afloat during these draconic epidemiological restrictions, you will be able to weather nearly every turmoil in the future.

The government can help

There isn’t a country on the planet whose national and local governments haven’t stepped in with relief plans for the economy. During every crisis, the government is aware of what is going on, as they do not wish for jobs to disappear.

There are many loans and grants you can apply for, so be sure you do so. Of course, there is truth to claims that this financial aid isn’t necessarily aimed at industries most hit with the pandemic.

After all, a financial stimulus will help you stay liquid, maximizing lines of credit. Apart from governmental organizations, there are NGOs that are willing to help small businesses weather out the storm by offering cash grants or free counseling.

Try not to fire anyone…

As already mentioned, the governments’ biggest concern is job stability, i.e. that no one gets fired. From a purely moral point of view, you too should avoid sacking anyone unless it’s absolutely necessary. The aforementioned relief plans mostly consist of wage subsidies that are aimed at saving jobs.

You can use the fact that the government is willing to cover your employees’ salaries by assigning them other tasks. For instance, when a brick-and-mortar store closes, a shop assistant can start working as a customer support agent for the online shopping platform.

…or cut their salary

Apart from saving jobs, you should look to protect workers’ salaries. Namely, a pay cut of a mere 20% is enough for someone to quit their job. The salary you pay your workers should be enough for them to support their families without having to work two jobs.

Although it might be necessary to cut workers’ salaries, tread carefully and don’t take too much money away from them. After all, your employees are the ones making you money, so be a compassionate boss and look for opportunities to improve cash flow elsewhere.

Improve the cash flow

The reason why many businesses have switched to online trading is the urgent need for cash. During the coronavirus pandemic, the demand is still there but customers find it difficult and complicated to purchase an item or request a service.

Not every person on the planet had experience shopping online, so for a significant percentage of your loyal shoppers, this is a novelty. You can convince people to click the “order” button by giving them elusive online discounts. 

Another way to draw in shoppers and keep the cash flowing is to offer complimentary shipping for high-end products. Some estimates show that every 3 out of 4 online shippers would like to get free shipping with items costing over 50 dollars.

Cut the costs

The biggest problem with a sudden economic downturn is the uncertainty that the future holds. That’s why you should look to cut down operational costs as much as possible. For example, renegotiate all the business deals you have with your suppliers and vendors. 

For instance, vendors that are doing well should be ready to grant you payment extensions if you have cooperated with them for years. A 60-day reprieve might not sound like much but it can very well help your business survive these tough times.

Keep in mind that just as you are struggling not to lose a single customer during difficult times, vendors and suppliers don’t want to lose loyal customers like yourself. That’s why they will most certainly be willing to sit down and negotiate with you than to deny you instantly.

Try to settle disputes out of court

Gone are the days when you could afford to take a business-relate issue to court. This costs a pretty penny but at times when you are trying to cut operational costs, it makes more sense to find a good litigation lawyer and try to resolve matters out of court.

The lawyer you hire should have experience in business law. That way they can double as your legal advisor during the economic downturn. For instance, it’s good to have a legal expert to consult before filing all the documents required for a governmental subsidy.

The way you treat your stakeholders

Do you know that a financial crisis in a family strains the relationship between family members? Well, the same thing happens with your stakeholders. So you have to remain on good terms with them during the darkest hour.

All the communication channels have to remain open, so stakeholders are constantly kept updated. The best way to achieve this is to assemble a team of people that would be in charge of handling customer relationship management and stakeholders’ queries and concerns.

More than one channel of communication

Speaking of communication, a contemporary crisis requires contemporary solutions. Instead of phone calls and e-mails, open new channels of communication with stakeholders, business partners, and customers.

By using direct tools of communication, from Zoom meetings to Facebook chats, you are making sure that there are no misunderstandings in a time when every purchase counts. Customers and clients should be able to reach essentially 24/7 using a com channel most convenient to them.

The time to be honest

Many business owners cannot handle the pressure of an economic downturn, so they turn to trickery to stay afloat. However, when you start lying to your cooperants, you lose your brand image. From there it’s all downhill for your business.

When times are tough, try to remain sincere, as a personal touch to running a business enterprise is welcoming. The whole society is going through s turmoil, so being compassionate and exercising empathy become survival skills.

Try to talk to people as much as possible and avoid refusing business offers blankly. An economic downfall is not the time to practice bigotry!

Employees become like partners

We have mentioned several times that you shouldn’t lay people off or cut their salary. In fact, human resources are the most valuable part of your firm. Send excess staff to work from home, as some people are actually more productive when working from home.

Once you start looking at diligent and loyal employees as partners and not as a liability, you come up with new ways to employ them. Of course, keep in mind that they too are stressed out because of the poor state of the economy. So try to go easy on micro-management.

It will take a while before the economy bounces back

Although some economists expect a quick economic after the pandemic is finally over, things are not looking up right now. The lockdowns are still in place in many parts of the world. But what is worse, the lockdowns seem to be reoccurring.

This uncertainty makes it hard to plan for recovery, especially for small businesses. Be prepared for a slow and painstaking recovery of the global economy to pre-pandemic levels.  

The coronavirus pandemic hit hard and suddenly but coincidentally, this could turn out to be a good thing. Namely, if your business model is able to adjust and survive, then there isn’t an economic downturn you cannot beat!

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