Business Planning – Staying Afloat When Times Get Tough
Changes in the economy can send unsuspecting businesses on a roller coaster ride that threatens financial stability and can lead to unrecoverable losses if operations aren’t properly managed. The companies that survive an economic downturn are those headed by smart managers who take the initiative and follow the right steps to support success and growth even when cash flow is uncertain.
Organize Finances and Trim Unnecessary Expenses to Optimize Cash Flow
To know which areas of the budget need to be trimmed, a business owner must first become very familiar with the state of the company’s finances. After organizing all relevant paperwork, including invoices, receipts, tax information and profit and loss statements, the next step is to review the budget plan created at the start of the year or the beginning of the quarter. This gives executives a clear look at where finances are versus where they need to be, and it provides insight into areas that could use tighter management.
Choosing where to make cuts based on this review is where many businesses run into trouble. Downsizing too much in critical areas backfires when the economy rebounds and it comes time to scale up again. The smartest approach is to pinpoint and eliminate unnecessary expenses and reallocate funds to the channels that provide the highest ROI. Knowledgeable bankers and financial advisors can work with business owners to help maximize profits from every channel.
If cash flow is too low and the business needs capital right away, it may be necessary to:
- Develop a debt restructuring plan to reduce monthly payments
- Sell unused equipment
- Rent out extra space
- Secure a short-term business loan
As with any budget plan, temporary measures put in place during lean times must be reviewed on a regular basis to determine if any adjustments need to be made.
Modernize Marketing with Low-cost Solutions that Increase Brand Awareness
One critical mistake that business owners often make when the economy is slow is scaling back on marketing. Many experts advise to do just the opposite by shifting marketing efforts into more cost-effective channels. SEO, social media, blogging and content marketing offer free or low-cost ways to continue building brand awareness even when advertising budgets are looking slim.
A critical resource that all these marketing channels require is time. Marketing teams can take advantage of slow operations during an economic downturn to analyze existing campaigns and create new strategies to be deployed in the coming months. Creating content in advance ensures that there will be something new to share with customers when business picks back up again and resources for content creation are tied up in other endeavors.
A slump is also the perfect time to run targeted campaigns aimed to bring in extra money. Limited-time discounts and special coupons encourage wary consumers to make purchases. Inventory reduction sales offer an immediate increase in cash flow while helping businesses get rid of excess product without suffering a loss. Word about these deals spreads rapidly when shared through content channels.
When the Economy Rebounds, Have a Plan to Drive Future Growth
Maintaining relationships with customers and suppliers during tough times leaves channels open for when the economy picks up. Businesses that continue networking and focus on providing high-quality customer service will have a vast support system in place to help them return to the market in force. Feedback from this group provides valuable insight into potential areas for future growth, such as new products to fulfill specific consumer needs.
Maintaining open communication also allows business owners to stay on top of changing trends in the industry and in customer behaviors. By seeking out potentially lucrative areas to expand into, it’s possible to craft a plan for continued success that can be executed the moment that the finances become available. Regular budget reviews show where funds can be shifted to make the most of these new endeavors and ensure a strong comeback.
More information and advice on managing finances can be found by visiting the Personal Money Store blog. Explore more options to create a positive cash flow, and discover why a slow economy doesn’t have to mean the end for any business.