How Small Businesses can cope up with Recession
Those who wonder running a small business is a cake walk must understand it not an easy feat. The path gets even tougher during economic downturn. Been in the era where everything can happen in a blink is a threat for small ventures to thrive in less than booming times. There is a discussion going around about the probability of recession hitting the markets in 2019.
What are views of Optimists and Pessimists about the economic breakdown?
According to Wells Fargo/ Gallup Small Business index, there is a drastic decline in small businesses’ confidence i.e. from 129 to 106 now, although the count is positive. Besides, Small Business Optimism Index is at high levels than Great Recession levels after decreasing from 108 to 101. Assuming recession from this detail doesn’t seem good so it is recommended interpreting the data of current situation.
So, none of small business entrepreneur cannot predict about financial crunch, follow some advice to continue with their work. Like you take proper precaution while enjoying ride, similarly there are some steps you can follow if recession hits in 2019.
- Expanding staff: It is not a good idea to hire a new member as wages will rise in 2019. So, focus on maximizing the existing employees capacity and if you want to hire than opt the option of hiring freelancers or contract employers.
- Working capital: Keep in mind the best time for getting business funding is when you do not require money. The best option is a ‘Line of Credit’ as drawing funds is easy whenever required and you are required to pay interest after getting the amount in your account.
- Holding large investments: Try to conserve your business investments and do not hold it back as you want to grow so make wiser decisions about spending money.
- Customer service: Reducing the workforce may seem a good option but is counterproductive because of two reasons i.e. you failed to instil confidence in employees and second, when economic conditions get better you have to start from scratch by training new joiners. So, customer service is a reason why small ventures stay in the competition. Make it your option during economic downturn.
- Concentrate on core competencies: Adding other products or providing services in your bunch of offerings is not diversification. It mere wastage of money and time. Plus, it can damage the core business as well as brand and reputation. Just drop this extra and concentrate on what best you can offer which is profitable to recession proof venture.
- Developing and implementing strategies to win competitor’s customers: If your venture grows in the hardest times then you must focus on expanding your client or customer base from the competition. Offer something more or different than the rest.
Bottom line: Understand there is no sure short formula to keep your small business recession proof. But implementing some of the practices mentioned above ensures you to survive through the tough times. You might even profit out of them as well.