Tips On Scaling Through A Recession For SME’s

A recession is a negative economic growth for two consecutive quarters. Small businesses are prone to a general slowdown in economic activities. How can this situation be managed when it occurs?  We know that recessions occur when there is a widespread drop in spending (an adverse demand shock), an adverse supply shock or the bursting of an economic bubble. This might sound funny but the effect is felt hard. There’s a fall in inflation and business profits fall while bankruptcies and unemployment rates rise. The good news here is that recession can be managed when it occurs.

Below are some tips on how to manage a small business in a recession.

#1. Art and Mechanics

There are art and mechanics in business. Building revenue is art, and cutting expenses is mechanics. The easiest place to start is with the mechanics. Review your financials. This can be practiced weekly. Examine which things are fixed cost and those that are variable.  Variable spending should be done only when it brings income. Look at different ways of operating your business; for example, instead of assigning a lot of work to one staff you can just share it which is also known as division of labor. Consider striking better deals and also hiring better people at a lower cost.

#2. Bartering to curb spending

A great way to conserve cash is by bartering transactions to curb your spending. Success is hard to achieve in isolation. Relationships or rather alliances should be established with other companies, plus competitors can become an investment in your future. This can be achieved creatively by barter.

#3. Get more customers

When it comes to acquiring customers, you need wisdom here. There may be an opportunity to acquire customers unhappy with their existing providers. This is done in terms of increasing revenue. Don’t forget. Building loyalty among your own customers during a recession is crucial. Getting more customers may not give you money income immediately, but one day, you’ll realize that you did the right thing when the economy becomes more robust. Strategies like providing freebies works. For example, when consulting a firm and you have an open hour, you can just use that opportunity to give them away. It will win the hearts of more customers for you.

In conclusion, you should try and create a new attitude. If you are having problem borrowing from a bank, you can decide to try a more creative solution. If your business has valuable assets, you can create capital by selling them. This might prevent you from borrowing additional money for growth.