8 ways your business can survive an economic downturn

Even at the best of times, running your own business is not always an easy proposition and requires constant attention and course-correcting to get everything right. Unfortunately, these are hardly the best of times; between the novel coronavirus pandemic and the economic downturn that has come with it, a lot of businesses – many of which already operated on narrow margins – are in a tough spot right now.

With that in mind, owners, executives or managers of these operations should be asking themselves how they can help ferry their companies through these difficult situations. While there's certainly no secret answer to doing everything here successfully, the following tips should help any business find a way to make itself more effective in periods when things are uncertain and the economy isn't exactly booming.

1) Slim your operations to focus on what you do best

When you're facing a financial crunch, one of the best solutions to keeping costs down and ensuring a strong cash flow is to go back to the basics of what makes your company so successful in the first place, according to The Balance Small Business. Trying to streamline your operations in lean times will keep your costs down but simultaneously help ensure that you are still doing your best work to keep your partners, customers or clients satisfied.

2) Remember that you will always have expenses

In business, just like in any other aspect of life, you always have to pay someone, The Balance Small Business said. That's why cash flow is so important. Whether you're a one-person operation working out of your own garage or you have 25 employees, there's a cost to doing business. Those could be as simple as paying the bills to literally keep the lights on, or ensuring you're properly funding everyone's health insurance. You cannot let your financial obligations to others slip.

There's no need to stress about the difficult economic times, as long as you have a plan.

3) Get a realistic picture of your finances

You are almost certainly keeping a lot of financial records in the course of doing business, in both good times and bad – and now is the time to consult them if you haven't done so, according to the Business Development Bank of Canada. Carefully reviewing your sources of business income and where that money goes could help you find areas where you can cut costs to shore up your bottom line, or tap potential areas of revenue that you might not have considered at first blush. Finding inefficiencies you can lean into and correct should help keep everything on track.

4) Think about opportunities you haven't explored yet

Of course, there may also be business opportunities available to you that you haven't explored yet, and even as you slim down your operations, you should be looking at these potential avenues, the BDC added. For instance, if you can find even two new customers or partners, that might unlock some serious areas for revenue and growth. It might not be easy to explore your full potential in this way, but it is important.

5) Nail down your cash flow

Cash flow is the lifeblood of any company whether it's a bull or bear economy, so you need to make sure you can keep revenues coming in so bills are getting paid each month, according to business expert Gerri Detweiler, writing for Forbes. If there are any areas where you are unsure of when you will receive a payment, it's important to get confirmation. Likewise, if you are able to push off any payments of your own, it might be worth exploring. Broadly speaking, though, if you can get a clearer picture of exactly when money is going in and coming out, other aspects of your operations become much easier to plan.

6) Improve your partnerships

As part of trying to better understand your cash flow, you will likely be in regular communication with your business partners – and that provides a perfect opportunity to improve your operations, Detweiler noted. Simply put, if you can come to a stronger understanding with your partners, customers or clients, and work in lockstep toward collectively improving everything you do together, it becomes easier to weather the storm as a team, rather than trying to go it alone. Now is the time to ensure your business relationships are fully aligned.

7) Refer to your backup plans

While it's unlikely that anyone has a contingency locked away in a filing cabinet for how they would handle a potentially years-long public health crisis like the coronavirus epidemic, you have probably planned for rough waters, according to the Aspire Wealth Group. In times like these, it can be good to look at your most recently updated versions of what you would do in case Situations X, Y, or Z happen, and see how those line up with what you're experiencing today. If you can identify a good, workable fallback plan, you might find that it's the time to start following it.

8) Talk to your lenders

Finally, your business probably has a lot of financial obligations that go beyond paying for raw materials, parts or services, and often, these payments cannot be avoided, according to Signature Analytics. Financial considerations such as business loans and credit card bills should never be ignored, but in difficult times, you might find there's use in talking to the financial institutions that control your debt and finding workable solutions to help you meet your obligations without busting your business budget. There may be more areas for compromise than you think.

While you may certainly feel now is a time for action, it's important not to make any rash decisions. Taking a careful accounting of all your options for how to proceed when things go sideways will help guide your business out of the current situation and aid you in finding a workable solution that will allow you to weather the storm as an organization.

Categorised in: Starting a Business in Arizona

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