By Gobind Preet Singh Sethi

Challenges in various forms are usual in the life of a company or a business. These challenges, depending on its extent, may be quite enough to lead to the downturn of such business and even, its eventual closure. According to the United States Small Business Association, only 25% of businesses last 15 years or longer. The percentage of failing businesses across the globe is bound to increase due to the emergence of the COVID-19 Pandemic and its consequent impact on the economies of the affected nations.

Overview of financial challenges faced by businesses

It is common that amongst other factors, the survival of a business is connected to its ability to generate enough revenue in order to meet its working capital requirements and other associated costs. The need to expend huge costs in generating power to run the business, providing security for assets and products, providing for essentials such as water and other office consumables, employing the right staff and paying their salaries, fulfilling regulatory requirements etc., takes huge amount of the revenue generated or even the capital invested in such business.The United Nations have indicated that the slowdown in the global economy due to the Covid-19 Pandemic will cost the world around USD 1 trillion within this year alone. Even with the easing of the lock-down, affected businesses may not be able to recuperate fast enough to sustain their operations. This gives rise to the need for such businesses to look on how they can manage their operations and resources better in order to survive this economic slowdown and other financial challenges that they face.

Strategies to be adopted by the firms to stay afloat

Declines in consumer confidence and decreased sales can threaten all businesses, but small businesses can be particularly vulnerable. They often don’t have reserves to help them weather difficult times. From protecting your cash flow to building your customer base, implementing a few practices in advance can help recession-proof your business so it survives and even thrives during economic downturns. Some strategies which a firm must adopt to counter challenging economic times are:-

1.Protect Cash Flow

Cash flow is the lifeblood of any business. Money must continue inflowing and outflowing for optimum business health, with the obvious goal being that they bring in more income than spending on expenses. Expenses are omnipresent as long as business exists.

2. Review Inventory Management

The management should see whether something can be done to reduce their inventory costs without sacrificing on the quality of goods sold or giving any sort of inconvenience to the customers.

Is there a drop-shipping alternative that will work for them so that the firms can eliminate shipping and warehousing costs? Just because they’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean that they have to keep doing things that way, especially when there are other ways to protect their valuable money.

3. Focus on Core Competencies

Small business owners often simplify the concept of “diversification,” translating it to simply “different.”

Simply adding other products or services to the offerings isn’t diversification. At best, it’s a waste of time and money. Worse, it can damage the core business by taking time and money away from what the business is able to do best, damaging their brand and reputation.

4. Win the Competition’s Customers

One must continue to expand their customer/client base if any small business has to prosper in tough times. This means drawing customers from their competition.

These can be done by,offering something more or different than what the other guy does,Researching  the competition and see what the firm can do to entice their customers into becoming your customers. How are their competitors advertising? Visit their business locations. Ask consumers what they like or don’t like about those companies, then tweak their own business practices accordingly.

5.Make the Most of Current Customers

The bird in the hand is your customer or client, and they’re an opportunity to make more sales without incurring the costs of finding new customers.

Even better, there might be loyal customers, giving the firm many more sales opportunities. A firm can’t afford to ignore the potential profits of shifting their sales focus to include established customers if they want to recession-proof your business.

The key here is excellent customer service. By Ensuring that customers or clients love what the firm does or sell helps keeping them happy.  A firm must Identify their customers needs, then meet them. The main priority for any firm is to retain their business at all costs. This is more important during a recession than at any other time.

6. Don’t Cut Back on Marketing

Many small businesses make the mistake of cutting their marketing budget to the bone in lean times, or even eliminating it entirely, but this is exactly when the small business needs marketing the most.

Consumers are restless. They’re always looking to make changes in their buying decisions. By helping them find the products and services they need and to choose them rather than others by getting their name out there they can step up their marketing efforts.

Nothing will make your business 100% recession-proof, but implementing these can help ensure that the business survives tough times and possibly even profits from them. It all begins with analyzing how a business is doing things now and looking for ways to improve.