How can you protect your small business from the effects of an economic slump?

One of the most important areas to focus on during an u certain economy is to have lots of variable costs and few fixed costs. Variable costs only cost your business money on a per sale basis. Fixed costs involve paying less for more goods but you carry the risk if you over buy. This applies to equipment and suppliers. In a challenging economy variable>fixed. Keeping you nimble and ready to adapt.

How can you protect your small business from the effects of an economic slump? Even in a down turned economy, business continues. The competition may be stronger as customers become fewer. Here are two ways to ensure your product(s) / service(s) are utilized by the customers available. First, having excellent customer experience and second, operating lean. People buy from people they trust and like. Now is the time to put in to practice excellent service(s) and experience(s). Industries that fare well during recessions keep there costs down and service up. Take time to trim back and operating frugal keeping your operating costs at an effective level. Being proactive in these area will keep your business protected in an economic slump.

These points around cost control are relevant in economic good times to ensure you have cashflow during an economic slump. Ensure that during the "Summer months you fix the roof." Don't wait until it rains or cashflow is restricted to do the general maintenance jobs or ensure your operation is lean. Same applies to your health!

Small businesses don’t usually have out of control overheads. So cutting costs usually means letting good people go, which is the last thing you would ever do unless you business was in financial distress. As a chartered accountant and finance director, this could be your time to be bold and stand out against your competitors. Do more marketing, pivot your product slightly, whatever you need to do to keep your business growing. Because your competition will probably be cautious and slow down, or even shrink. Of course you need to have good financial plans and a way of tracking progress to make sure you’re financially healthy, but this is good business sense regardless of the economy.

You can insulate your small business from an economic downturn by growing steadily, not taking on too much debt, and having a cash reserve to fall back on---Hire the best people for your company, since success in business is closely correlated to exceptional employees

Tightening credit terms, following up promptly on invoices and knowing which revenue streams are working effectively is something a bookkeeper can do and so this can be outsourced in order to allow a business owner to focus on managing, running and growing the business. As Alan Furlong says "Low profit is like cancer and slowly erodes a business, low cash flow is like a heart attack and will kill the business on the spot."

A rich Employee Benefits Platform that provides for the needs of employees ties employees to a company more effectively than a few dollars an hour raise.

You can't assess your business model or plan strategically unless you have up to date data on what is working and what is not currently giving a return on investment. A business coach with industry sector experience can help with strategic planning. Don't wait for a downturn to make difficult hire or firing decisions. Meet with your triangle of support; Accountant/Bookkeeper, Financial Adviser and of course YOU - plan for future corporate and personal tax bills and put in place relevant tax reducers such as pensions to ensure the business is also providing you with a medium and long term retirement plan. Of course your business can be part of that retirement plan but you need to establish it's value.

As a very small business owner of a medsapa located in the most competitive area for this type business of Atlanta, I can say the key to recession, covid, competition challenges is by far, RELATIONSHIPS (with clients, staff, neighbors/neighborhood , industry fellows, etc). Focus on, nurture and value all relationships, in addition to all the classic business tips mentioned here and your small business will withstand any challenges and always thrive.