Business Survival Strategies During a Recession

A business crisis can strike at any time despite your best efforts to manage your business in ways that will help it survive and thrive.  There may be situations beyond your control like an economic downturn or a well-funded competitor.  

Whatever the cause, you may have to take measures like thinking of business survival strategies to be able to manage problems when they arise and to keep your business afloat.

The pandemic has brought a near total global shutdown of most industries for an undefined period of time.  The existence of the internet, which allows people to work at home and communicate with their colleagues, has been a source of hope for many, allowing them to get through the tough times in business.

While businesses are still on the downward slope, you have to make drastic moves for your business to keep moving forward.  Keep these strategies in mind as your business struggles through the survival mode:

Regularly Assess the Health of Your Business

You may have to adjust on product pricing, marketing initiatives, hiring, benefits, and even new launches on your business recession planning.  Gather data that will give you a clear understanding of your day-to-day operations.  Try to answer these questions with the metrics you have set:

  • Are there insufficiencies regarding your product or service offerings?
  • How much talent can we afford right now?  How far can we really stretch people?
  • What resources do you need to maintain or exceed current output?

Implement Necessary Change

Once you have identified the trouble areas of your business, do everything you can to make the necessary changes to make your business more resilient in this uncertain economic climate.  Here are tips on improving your cash flow:

  • Reduce and slow down the outflows of cash.  

This strategy includes reducing your monthly rent, getting discounts on utilities, cutting on wasteful discretionary spending, lease rather than buy or buy used, and pay payables later.

  • Increase and speed up cash inflows.

Turn the trend of a plunging revenue around after slicing your expenses and cash outflows with these tips:

  • Collect receivables sooner and offer customers a discount, like 1-2% for paying sooner.  Be friendly, courteous, and understanding while aggressively following up on receivables.
  • Keep your existing customers by offering a premier product or superior customer service.  Remind them of the exceptional value you offer.
  • Double-down on your best customers who are your biggest accounts.  Give them a call, send an e-mail, or a personalized card to let them know how much you appreciate them for their loyalty and continued patronage.  Make them feel how you are concerned about their needs.

Position your business for the recession

Adjust your marketing strategies during a recession when consumers spend differently and the business environment is not as it is like during the good years.

  • Lower inventory costs and free up much-needed cash.  Opt to stock fewer units and keep more cash in your accounts.  You may rethink liquidating the worst-selling products.
  • Revamp your product line or marketing campaign to provide more value to your consumers’ purchases.  It doesn’t mean that you slash prices.  Drastic price-cutting should be the very last tactic you use.
  • Leapfrog competition by launching a new initiative to take market share from your competitors.  Know what’s happening in your industry by staying abreast of news so can determine ways to put yourself in a position to accelerate through the recovery.

Look Beyond Layoffs

Layoffs aren’t just harmful to workers but constantly for companies, too because hiring and training are expensive.  It is not the only way to cut labor costs according to Harvard Business Review.  You can consider hour reductions, furloughs, and performance pay as strategies for business survival during a recession.

Business Recession Planning

Be ready to make tough decisions as you implement these business survival strategies to improve your business during a recession.  Those who plan for all possible outcomes are best poised to survive.  So, think long-term planning.

Remember that a recession is not the only type of disaster that can impact your business.  There will always be situations where demand and revenue fall and uncertainty about the future increases.  If you are able to mitigate the damages now,  you will be better prepared to survive any economic climate in the future.