Tips During an Economy Crisis
Everywhere there is talk of economic crisis and the current recession. Some predict that will last a year and others say it will be four more years. Nobody really knows for sure. However, more importantly take action to adapt to new circumstances – to wait for what might happen – and eventually earn more money or, in any case, lose less.
In a recent article in the Wall Street Journal recommended, for example, proceed to the renegotiation of everything can be renegotiated. This strategy already has been implemented by many small businesses that are seeking new terms with the owners of the premises to improve economic conditions for the payment of the rent of the premises. Others are renegotiating with their suppliers to achieve greater benefits for financing the purchase of their products. This is truly an opportunity to renegotiate everything and save every dollar possible. Very quickly perceive that if everyone is willing to cooperate, at the end the people that you end up renegotiating sells them to you. Therefore, you should go ahead and take the initiative.
In times of economic crisis, a series of tips for the difficult situation. In general, one can conclude that we should be more conservative and take fewer risks.
The following is a compilation of advice and measures that business owners can implement to survive an economic crisis.
1. Make a plan to address the new circumstances. This measure is consistent with the above about being more conservative. This means that businesses should develop contingency plans to deal with new emergencies.
2. Cut any excess. The excess expenditure should be cut in advance and not wait for presenting the cash flow problems. For example, costs such as travel expenses can be reduced by creating alternative plans to overcome the shortcoming that it generates. It is preferable to make the cuts as soon as possible and not when the company is about to break.
3. Watch every penny as if it were your last. It should be more analytical in how money is spent to avoid liquidity problems. At times of crisis loans are harder to obtain, therefore, care should be cash to the extreme. Try to extend the maximum payments to suppliers to keep the cash in our power.
4. Optimize cash flow. In the same way they should extend payments to vendors must create incentives to make our clients pay as soon as possible. Some options include creating programs for early payment discount or offer discounts for volume.
5. Make a detailed survey of finance. It consists of constant monitoring of the finances and financial indicators to be vigilant about possible problems. Carelessness or excess can affect your ability to generate working capital.
6. Renew your business plan and its point of equilibrium. It involves making a detailed review of your business plan to determine changes in the market and its consumers. In this way, you can make the necessary adjustments so that your business is not affected by the crisis. You should be able to explain the business plan to creditors in case you require a refinancing or restructuring that would reduce the monthly payments on existing loans or debts.
7. Have a Plan B. Design an alternative plan to its current business plan. This may involve taking extreme measures such as postponing the purchase of new equipment and instead opt for temporary lease. In general, you should take flexible measures that can be implemented quickly if the business begins to reach its lowest levels of profitability.
8. Check the supply of goods or services. Some types of businesses benefit from the crisis. You can be the case for insurance companies, therapists or liquor because their products require greater demand. On the other hand, there are other products that will always be necessary as food, water and medicines, among others. Your task is to recognize what those products which are indispensable to their customers. In turn, if necessary, stop selling products with a lower profit margin and little demand. In any case, optimize the supply of products that their customers always require for your business.
9. Offer discounts for future purchases. Do not wait for customers to take the lead. Offer special packages for advance purchases. For example, in the case of a beauty salon instead of charging $ 50 for a hair color, offers the same service for $ 35 if the client agrees to purchase a minimum of 6 per year. Be creative, there are multiple combinations that can be offered. The idea is to sacrifice some income per unit in exchange for a steady income for a longer period of time.
10. Listen to your entire network of customers and business partners. The higher your perspective changes and trends that are happening as a result of the crisis, the better your evidence to make decisions in your business. Maintain ongoing communication with customers and get their feedback on how they see the future in the next 3, 6 or 12 months. And do not forget your suppliers, competitors or employees. This is the best time to optimize when all other resources are also taking preventive measures to tackle the crisis.
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