An economic recession is a cycle in which the economy as a whole is under decline.This basically the end of the phase of marked growth of the business cycle. The economic crises due to lower consumer purchases and are characterized subsequently reduced levels of production companies.
During economic downturns are admittedly difficult and formidable obstacles to small businesses to survive and try to grow, new opportunities open up an economic downturn. A well-managed company can realize the possibility of clients gaining market share from competitors. Enterprising entrepreneurs seize the opportunity to turn an economic downturn, by developing alternative ways of doing business that were never performed during a previous period of growth.
The challenge of successfully navigating your business through an economic recession in the restructuring of its business with current economic realities. In particular, as an entrepreneur is renewed focus on core business clients / customers, reduce operating costs, save money and manage proactive rather than reactive need, is of the utmost importance.
Here are the best practices are helping to successfully navigate your business through an economic crisis:
Objectives:
The main objective of any business is to survive the economic crisis and the development of an operation leaner, more profitable and efficient. The second objective is to grow the business even in this economic crisis.
Objectives:
• Save money.
• Protect the heritage.
• reduce costs.
• Improve efficiency.
• Increase the customer base.
Processing:
• Do not panic … History shows that economic crises do not last forever. Keep calm and act rationally, since turned their attention to the size of your business on current economic conditions.
• What you can control focus … Get the rhetoric does not prevent the media recession and economic slowdown that the financial success. It’s a trap! Why? Thanks to the condition that the economy is beyond your control. Surviving recession requires special attention, that you can control, such as business relevant.
• Communicate, communicate and communicate! Beware the trap of trying to do too much alone. This is a difficult task indeed to survive and grow your business solely with your own efforts. Solicit ideas and seek help from other people (employees, suppliers, creditors, customers and consultants). Honest and consistent communication. Effective two-way communication is the key.
• Negotiate, negotiate, and negotiate! The value of a series of strong bargaining power can not be overstated. Negotiate better deals and contracts is an absolute must for realigning and resizing your company to the current economic conditions. The key to success is knowing not only how to develop a win-win approach in negotiations with all parties, but also taking into account the fact that a positive result for you.
Activities recommended approach:
1 To recommend the following list of activities for best practices is critical to the survival and growth of your company during the economic recession. The actual financial health of your company especially at the beginning of the economic crisis, determine the priority and urgency of implementing the activities of the following best practices.
2 Prior to carefully manage your cash flow: cash flow forecasts to ensure that the monthly expenditure and expenditure in accordance with credits. Include the financial statements in financial reports monthly. The cash needs of the project, three to six months in advance. The key is knowing how to control, protection and put the money to work.
3 Timely recovery of debts: This asset should be converted into cash as soon as possible. Offering discounts to encourage timely payments. Make changes in the conditions of sale for slow paying customers (ie the net change of 30 days for COD). Invoicing is an important part of your cash-flow management. The first rule of invoicing is to do as soon as possible after products are shipped and / or services to be provided. It places the emphasis on reducing billing errors. Most customers delay payments because an invoice will be charged the cost of errors and so it is not until they receive a corrected copy. E-mail or fax your invoices to save time of shipment. After the payments you have received and make deposits more frequently. The key is to generate a collection of efficient, timely payments and provides an indication of problems to develop.
4 Back focus for existing clients / customers: Make customer satisfaction your priority. A periodic review of their customers can purchase history and frequency of purchases show some interesting facts about your customers buying habits. Ability to provide long-term contracts with key customers / clients to sign contribute to your safety. Offer a discount for cash payment in advance. The key is to do what is necessary to loyal existing customers.
5 Back to negotiate with suppliers, lenders and owners:
i) Suppliers: Have the negotiations at the level of need, saying that his company has reviewed its cost structure and noted the need for low-cost suppliers. . Tell the supplier that the relationship they have developed a value, but is required to receive an immediate reduction in costs. Ask your supplier for a material, the lowest prices to finance more than the cycle time of payment, and the elimination of taxes. You will also find, if you can buy stuff from them in the field of maritime transport. In return for their price concessions, be willing to accept a long-term contract. Exploring the idea of bartering as a form of payment.
ii) Lenders: Everything in business finance is negotiable and your relationship with a bank is no exception. The first step to successful renegotiations is to convince your lender in the final analysis, it is believed that paying the mortgage can be renegotiated. Should bet their banks so that would be in your interest for a new agreement. We are your business plan and action plan that includes cost-saving initiatives, together with the “how” and “when” the implementation of his plan is the best way to achieve this goal. Explain that your cooperation is needed to ensure that they survive as well as, grow your business during the economic recession. Products traded: the interest rate, security is necessary for the loan, and the beginning of the payment. A start date for repayment could be immediate, within several months to a year. The key is to understand that your lender will work with you, but frequent and ongoing communication with them is important.
iii) Landlord: Meet with your landlord. Explain your needs, the duration of the lease at a reduced price to renew. Be sure to include a clause in the lease that the right to have rented a part or all of the space sublet rights.
6 In re-evaluate your staffing requirements: This is a very critical area. Wages / salaries is a major cost of doing business. Therefore, any reduction in the labor market through changes in working hours, short-term layoffs or permanent layoffs, a benefit of immediate cost savings. Most of the companies increased hiring of new employees in good times, only to find that too slow at the moment due to higher sales during the economic downturn. To slow down in terms of reducing the size of your staff, be very careful, not personal at a level that you save on customer service and quality personnel. Consider the use of part-time or the current trend of outsourcing certain functions independent contractors.
7 shop for better insurance rates: Learn how to determine prices for the similar range of insurance if your insurance is competitive today. In addition, to reduce the possibility of declaring their contribution to premium costs. The key must be protected with the right balance, but no less or more secure.
8 New evaluate your advertising: Contrary to other cost-cutting initiatives, evaluate the possibility of increasing spending on advertising. This tactic clearly the advantage that “noise” and congestion (fewer ads) on the market. The period of crisis the opportunity to raise awareness and additional demand for your product / service offerings.
9 Find the help of external consultants: the use of an advisory committee composed of your accountant and lawyer and business consultant offers objectivity and provides advice and guidance. Their experience in working with similar situations in past economic recession is invaluable.
10 Review your other expenses: a target through-the-board cost-cutting initiative of 10-15%. Try to eliminate unnecessary costs. Tighten their belts to survive the crisis really makes sense financially.
Proactively manage business processes through an economic recession is a major challenge and is critical to their survival. But through well-planned initiatives, an economic downturn to create great opportunities for your company to gain market share. To take advantage of this growth opportunity, you must act quickly to implement best business practices to continue on the reorganization and downsizing of your company to the current economic conditions.
