How would an economic recession affect your business? When production slows, demand for goods and services shrinks, credit tightens and the economy enters a downward spiral, clients and prospects become much more focused on price. Everyone suffers the same squeeze, which means margins suffer. Companies that are not prepared for a more competitive environment tend to struggle and maybe even disappear. So how are you planning for the predicted 2020 - 2021 recession?
Nearly three out of four economists surveyed by the National Association for Business Economics expect a recession by 2021, according to poll results. Most businesses don't emerge unscathed from a recession, often only the strongest survive. But with careful preparation and planning, your company may live to grow another year. Give your business its best shot at survival with these planning tactics:
If your company has flat-lined in recent years and you anticipate the economy to flatten out or decline, don't predict 2020 to be the year you grow by 30 percent. That may seem obvious, but most companies plan for growth as part of their strategic plan, and having a plan that does not call for growth seems odd. Your plan to double the growth in five years may be aspirational; however, the economy may not support this plan or efforts. So, this year, you may want to be conservative with forecasting and goals.
Where you set revenue goals depends a lot on what industry you're in and other variables that are out of your control, such as things like weather, fires, or a recession. So, keep a close eye on your economic forecasts and plan accordingly.
You won't be the only one who feels the squeeze of this recession. Your customers will start to feel the pinch and begin to shop around for something cheaper, or a better deal.
The best strategy is to be better than your competitors at executing in the field. That means having a solid sales process focused on how your product or services affect your customer. Your salespeople need to be experts at demonstrating how your solution can positively impact their business, cash flow, revenue, and expenses. We often hear salespeople tell their prospects about all the cool features that their product has but, they are not nearly as strong at relating how the offering will help them.
Your salespeople must be clear on how your product will save the customer money, eliminate risk, how it will improve efficiency, etc. What are the differences in your products/services that customers see as being unique, something they need, and are willing to pay more for it? That's how you're going to increase the likelihood of your product being chosen over competitors.
Cash flow is key in any small business. Debt starts to weigh more when budgets tighten, so pay off what you can while you have cash. If you foresee a flattening in your industry, hold off on acquiring new debt like large capital expenditures. Think about cutting costs, prioritizing payments, meeting with financial advisors, etc. In an effort to successfully manage cash flow, here's a shortlist of things you can do to fight debt:
Businesses that are proactive in managing their finances and paying off debt will be set for success when times get tough.
There is a lot of talk as to whether there will be a 2020 recession. No one can predict how much longer the economy will remain upward or stable or when exactly the next recession will hit. All you can do is plan for it. Then if you've done the right things to execute better, you should come out ahead.