7 ways to protect your business against a downturn
Small and medium-sized businesses are particularly vulnerable to economic downturns. But all too often we see companies going under that could have stayed afloat if they had taken a few elementary precautions at the right time.
The right time to protect your business against a downturn is when it is relatively strong and you still have room to manoeuvre.
Here are seven steps you should consider taking:
- Don't rely on just one or two main accounts for the bulk of your revenue. Spread the risk by expanding your customer/client base.
- Maintain close communication with your bank and share your successes and failures with them.
- Reduce the debtor days on as many accounts as possible and accustom your customers to paying promptly.
- If you have to reduce spending, do so in non-core areas of the business.
- Examine ways to carry less stock without adversely affecting your core performance
- Don't lay off staff unless you really have to, especially those who provide ideas and inspiration. Use any downturn as an opportunity for key staff to develop new skills and coach newer members.
- The marketing budget is often the first casualty in a recession, but smart businesses continue to market through a downturn and position themselves to take full advantage of the upturn as soon as it starts.