If you own a business, you need to have nerves of steel along with the required skill set. You’re supposed to supervise logistics, conduct a SWOT analysis, take risks, make quick decisions and find novel marketing methods for a growing business. Along with internal matters of a company, you’re also supposed to monitor the external factors that might affect your business drastically.
History shows that big businesses have fallen prey to economic crises caused by inevitable global events: COVID-19, Russia-Ukraine War, and the Global Depression, to name a few. Companies that have successfully averted hitting rock bottom are those that quickly adopted strategies ensuring consistent cash flow.
Implementing financial strategies in times of crisis might involve expensive financial consultants. However, if you’re looking for more cost-effective and doable strategies, we’ve listed a few ways to keep your business running and growing even during a predicament.
Conduct a thorough financial analysis
Before taking any risks, you need to run an in-depth financial analysis of your business. It would help if you mapped out where your money’s going and where it’s coming from: including an inventory check and identifying your revenue sources. Once you’ve gathered all the financial information, adding it to accounting software is convenient.
Accounting software will keep you updated with your business’s cash flow, from generating payrolls to managing recurring taxes. You can efficiently maintain and monitor balance sheets and reduce bookkeeping mistakes.
Depend on online marketing
One of the most effective ways to keep your business afloat is marketing. Generally, advertising your business requires hefty capital. However, you can still have a strong marketing campaign with cost-effectiveness. Online marketing allows you to reach a larger audience with minimal costs.
Social media, such as Twitter, Facebook, and Instagram, are convenient platforms for marketing your business. One great benefit of online marketing is ensuring that people remember you. IKEA and Coca-Cola are two giants who focused on social media campaigns during the COVID-19 pandemic, intending to connect with the audience rather than increase sales.
You can get creative yourself if you have a new or emerging business and can’t afford digital designers. You can use free online design templates for small businesses to design social media posts, flyers, and posters to put your company in the limelight. Using these free customizable templates saves your money along with your time!
Form a budget
Once you know your finances, you can re-evaluate your costs and recreate a budget in times of crisis, which calls for cost-cutting. Your budget should include adjustments that will help optimize your cash flow. In times of crisis, you should cut down a minimal percentage on employee salaries, find alternate stock suppliers who charge less or increase the cost of your product or services.
Create a crisis management plan
The COVID-19 pandemic caught many businesses off guard and without a contingency plan. The unprecedented pandemic led to many businesses shutting down. On the contrary, a few companies stayed afloat during the crisis and grew significantly.
With flexible strategies such as work-from-home and liquidating a portion of the inventory to generate cash, you can ensure smooth operations even during a crisis. One such example is General Motors, which shut down its lowest revenue-generating European business division during the recession.
To create a crisis management plan for your business, you can run various stress tests to determine how your company would respond to a drop in sales during an economic crisis.
Branch out your investments
They say you don’t put all your eggs in one basket, which is great advice for business owners. It will help if you plan to diversify your investments by putting your money into different industries or companies. Not only does this help generate cash, but it will also reduce the chances of heavy losses in an economic crisis.
Track competitor performance
It’s imperative to track your competitors’ performance, especially during a crisis. Not only does being observant help find out what’s working for your opponents, but also what’s not! During an economic crisis, your product’s demand goes down. Hence, it would be best if you had your business thrive under constraints.
It’s essential to find out for your business how popular or unpopular your competitors are amongst the public. You can plan accordingly and fill the missing gaps to stay in the lead.
New and emerging businesses must expect the best but prepare for the worst. A crisis does not come with a warning, and you should have a foolproof contingency plan to keep your business from sinking.
Rather than spending money on financial officers or consultants, you can make intelligent and quick decisions that are affordable, practical, and don’t cost a fortune. Along with the strategies mentioned above, you should also be capable of thinking on your feet. Averting a crisis doesn’t require a definite plan but the ability to assess circumstances and act accordingly.
Written by: Raahim Jamshed
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