What to do when the economy turns down

Make sure you have a parachute

One of the good things about having a good network is that you get to hear about how many different companies are viewing the business environment. The bad news is that everyone is telling me that things are about to take a turn for the worse. Being a business owner now you have to think about how to be prepared for this. Here are some tips.

1.  Broaden your customer base immediately. If you have one or two main customers you are very vulnerable in a downturn.
2.  Take long term contracts where you can – whether for services or people.
3.  Reallocate your efforts to industries that are still going strong.
4. Consider how your products could be used by companies that are operational rather than project or transaction driven.
5.  For retail businesses, realize that wallets are closing so do whatever you can to make it easy for people to buy from you.
6.  Keep your good people and keep your standards high. Yes, you might be forced to cut costs, but when the quality of the experience goes bad for customers then you will lose your customers too. Bankruptcy will soon follow.
7.  Conserve cash where you can. Categorize your purchases or investments into necessary and nice to have. Only do the necessary.
8.  Try negotiating for longer payment terms for suppliers – you may lose any loyalty discounts but you will have longer to pay bills.
9.  Chase up overdue invoices immediately. Be nice about it, but be persistent. 
10.  Ask your staff for help – do they know any potential customers? Do they know ways to do things better? Work on this together.

Here’s hoping that this is a temporary situation, but there’s no harm in being prepared and you outlast your competitors so that when the economy does normalise you can grow again.