According to an article published in Forbes at the end of 2019, “ a recession is unlikely in 2020, but possible.” Now as we are nearing the end of the first quarter of 2020, it is beginning to seem like it might actually happen. With the stock market experiencing some of the most dramatic lows since the financial crisis of 2008 and all the shutdowns prompted by the Coronavirus pandemic, it could be time to figure out how to recession-proof your business. Here are some tips to help you survive the financial impact of a recession.
Maintain Marketing Efforts
Marketing is often one of the first areas business owners look at when deciding where to cut expenses during an economic downturn. However, this is exactly when you need marketing the most. Every single customer is important and your marketing efforts will not only help them find your business but encourage them to choose you over your competitors. You may discover that your competitors have reduced their marketing in the face of an impending financial crisis. This provides you with the perfect opportunity to put your products and services in front of their customers by maintaining or even increasing your marketing efforts.
Retain Current Customers
While increasing your marketing efforts can bring new customers to your business, it’s equally important to retain your existing customers when weathering a financial downturn. Otherwise, you’re just replacing one customer with another. Finding ways to cater to existing customers will increase loyalty and result in increased sales. It may even convert some of your loyal customers into brand advocates, helping to grow your customer base and increase revenue.
Concentrate on Core Competencies
Some experts recommend diversifying to survive the financial impact of a recession. While it seems like sound advice, proceed with caution. Do your research and make sure the products and services you intend to add complement your existing ones and are something customers want. Simply adding products or services without the proper research can end up being a waste of revenue when you need it the most. It may be more beneficial when weathering a financial downturn to focus on what you do best, as it will probably be the most profitable choice.
Closely Monitor Your Cash Flow
Cash flow is the key factor in maintaining the health of your business. with regularly recurring expenses such as payroll, lease or mortgage payment, utilities and taxes, cash flow out of your business will be consistent. The challenge is to make sure cash flow into your business is sufficient to cover all recurring expenditures with enough working capital left over to reinvest in your business and prevent it from becoming vulnerable. It is important to always monitor your finances and know exactly where you stand. This will allow you to analyze your cash flow and determine how much is needed for the various activities of your business.
Minimize the Financial Impact of Recession
These are just a few of the ways to help survive the financial impact of an economic crisis and they can be difficult when times are lean. However, it is important to stay the course as much as possible during a recession and come out of it as a strong presence in your industry.
CFG Merchant Solutions offers a variety of funding options to help minimize the financial impact and keep your business on track. Whether it’s a merchant cash advance, invoice factoring, equipment financing or any of our other funding options, we will guide you in choosing the perfect solution for your individual business needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets.
We focus on providing capital access to small and mid-sized businesses (Merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. Contact us or apply online today