“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” – Warren Buffet
The economic recession Nigeria is experiencing doesn’t look like what will end so soon hence the need to share some business survival strategies for recession. There is no one approach to surviving recession but this list will surely come in handy as it is working for people already as observed by Sandra Chinedu.
1.“Concentrate your energy, your thoughts and your capital.” – Andrew Carnegie
Recession survival strategy number one is to ignore every temptation to invest in another project but rather focus on your current business. Doing this diligently and strategically will help any business survive recession and save the business enough cash flow to buy back twice the investments people are selling off due to recession.
Companies can sell off majority of the stakes they own in quoted companies and use the cash pulled out to strengthen their balance sheet. Now why this? There is always severe drop in stock prices and value in recession, so instead of sitting and watching the values of your company’s investments go zero; sell off.
Secondly; to you need to make sure our business is well positioned to adapt to the economic changes that goes with recession and to achieve that you need to be focused on your business.
Finally if you can keep your business strong through the recession, then your business will grow stronger with the recovery of the economy and you will be able to buy back much more investments than you sold.
“Know your numbers’ is a fundamental precept of business.” – Bill Gates
The most important word in the world of business is cash flow. The second most important word is leverage. You need to gain a stronger control of your business cash flow. To survive a recession, it is advisable you keep an eagle eye on your cash flow. Ensure your cash flow stays positive throughout the recession by working closely with your customers to make sure they get maximum satisfaction. Endeavour to make sure cash continuously flowed into your business. Cash flow is the life blood of business so I am sure you don’t want to joke with it.“There is one paradoxical characteristic every entrepreneur must possess to succeed. An entrepreneur must be able to persuade his debtors to pay their debts promptly and at the same, must tactically delay payments to his creditors.” – Ajaero Tony Martins
“Watch the costs and the profits will take care of themselves.” – Andrew Carnegie
Another very important strategy to survive recession is to cut back on all expenses that are unnecessary. Be careful with your business expenditures. If your business spends money on frivolous things such as parties, bonuses, incentives and any other thing that has no direct impact on your company’s growth, then it’s time to cut back on them.
Advertising is the mouth piece of business.” – James R. Adams
One of the silly mistakes made by most business owners in a recession is to reduce marketing budget. Instead of cutting back on the marketing budget, I advice you spend more on marketing. Instead of going into hiding, it is better you do some marketing and let your customers know you will stand by them even in the face of a recession. Whenever you are strapped for cash; instead of reducing your expenses and hoarding some cash for emergency purposes, expand your means. All you need do is look for quality products at affordable prices or diversify and hit the road with some marketing. So the thing is to spend more on marketing and advertising when strapped for cash. This can also be applied to your personal life or business.
Run a pay as you go system
Also known as “bootstrapping,” this is one of the smartest strategies if the survival of your business during recession is of utmost importance to you. As a business operating in Nigeria because of recession, make sure extra expenses are made based on corresponding sales in other words pay as they deliver either service or product. For instance, let’s say you need to purchase some new office equipment or pay bills; strive to make sure that such expenses are made from the sales generated within that period of time.
Never pull out money from your reserve to settle such bills or expenses. If the sales are not forth coming, then you need to put in more effort with respect to marketing.
Focus your energy on survival
To stay relevant in a recession, constantly innovate; be creative with your services and product offering. Apple is known for its creativity and innovative products, constant innovation is a part of their overall strategic plan to stay relevant in the market.
“In three years, every product my company makes will be obsolete. The only question is whether we will make them obsolete or somebody else will.” – Bill Gates
In a recession, your overall strategic plan should be focused on one thing “business survival.”
Also work as a team. To be sincere with you; in a recession you should further deepen bond with your staff. Appreciate the importance of a business team. The major reason most small businesses will fail during a recession will be because they tried to survive by acting alone. Imagine trying to navigate a ship through the storm alone; it’s almost next to impossible. To survive a recession, you need to sail through the storm as a member of a team.
“Individuals don’t win in business; teams do.” – Sam Walton
Put more effort in excellent customer service
“A customer is always right. He can fire everybody in the company, from the chairman down, simply by spending his money somewhere else.” – Sam Walton
Loyal customers in a recession are your company’s greatest assets. Without them, your business will not survive the heat after all research said that it costs more resources and resources to find new customers than to retain existing ones.
“Business is not just about doing deals; business is about great products, and tremendous service to customers. Finally, business is a cobweb of human relationship.” – Henry Ross Perot
“Courteous treatment will make a customer a walking advertisement.” – James Cash Penny
In a recession if you want to stay afloat you must stay true to your customers by establishing a closer relationship with them; provide excellent services and deal with customer’s complaint with utmost priority. Remember a competitor is looking for an opportunity to poach your customers therefore you need to be on guard.
Inspire your employees
This is not only applicable during a recession but also when you are experiencing difficulties in business. In a recession like Nigeria is experiencing, companies will be laying off thousands of workers. Rather than lay off, meet with them and explain the present situation on ground and the need to take drastic measures.
“People are definitely a company’s greatest asset. It doesn’t make any difference whether the company’s product is cars or cosmetics. A company is only as good as the people it keeps.” – Mary Kay Ash
“We treat our people like royalty. If you honor and serve the people who work for you, they will honor and serve you.” – Mary Kay Ash
So when faced with a similar situation, you need to get creative. Show your employees love and they will commit themselves to your business.
“We were most creative when our back was against the wall.” – Anita Roddick
Lead by example by showing commitment
When employees see the effort you put in, they won’t have the will to complain. Whether you want to cut back on salaries, demand an increase in productivity, then lead by example. If you are going to increase work time and cut back on salaries, start with yourself. Take a pay cut and work longer hours; this way, your staff will see the amount of effort you put in and with that, nobody will have the right to complain.
Finally there is no one approach to surviving recession. You can network and talk to other business owners outside your industry and see what they are doing to stay afloat. Some of the steps they have taken may be applicable to your situation so ask questions.