Tips for small businesses during an economic downturn
The economic downturn brought on by COVID-19 is daunting. The good news is, the economy will eventually get better. In the meantime, there are several things small business owners can do to navigate choppy economic waters.
Keep your eyes open for opportunity.
During uncertain times, your instincts may tell you that it’s time to close up shop and sell your business, but a down market is seldom the best time to sell – especially if your sales volume is down yet you hope to receive a sizeable offer. Keep in mind that others are in the same boat, making now a good time to look for savings opportunities or areas to cut costs. In a tight market, your suppliers and vendors may reward significant order commitments with better pricing and terms. Don’t be afraid to ask about discounts that could reward your prompt payment. Now may also be a good time to consider joint venture partners or acquisition targets. Pooling resources and expertise can help all parties with business expansion, the development of new products or move into new markets.
Become a cash flow expert.
Is cash flow a problem? When cash is tight, there are steps that owners can take to stave off trouble. Your chances of persuading creditors to extend your payments are greater if you speak to them before they start sending collection notices. Recognize that your vendors may be experiencing financial difficulties of their own. In that case, your payment history can either hurt or help you during negotiations.
Maintain customer relationships.
You also need to keep a closer eye on your own customers. Checking in to see how they are faring helps avoid surprises and can lead to new opportunities. It’s especially important to follow up with customers who are behind on payments. Be willing to negotiate when appropriate. Within months, struggling customers may rebound – and they’ll remember those who were willing to work with them.
Above all, be open to the possibilities a downturn creates. Every cloud has a silver lining - sometimes you just have to search for it.