There is now little doubt that a pandemic recession is expected across the globe. However, not every business gets affected in the same way.
There are sectors of business that thrive during a recession while there are some that get almost wiped out. Some business decisions can make a great impact, some can add efforts give no returns while some can be absolutely devastating. But, what has time taught us? This is neither the first recession nor the first global pandemic. And today more than ever before, we have a lot of data ready for reference, to understand what choices are likelier to benefit of safeguard a business during a global recession caused by a pandemic.
Our experts have analyzed markets and trends all over the world along with having studied past indicators to understand 9 ways that can safeguard most businesses during a pandemic recession and although we are a service available to the US, many of these suggestions can be used by businesses present anywhere across the globe, the industry almost entirely being no bar. First, we’ll broadly cover all the inputs with explanations. Thereafter, you shall find a clear set of the 9 specific ways in which your business can be streamlined to tackle the effects of a global pandemic caused recession.
Liquidity is Indispensable for a Business’ Survival
Liquidity is absolutely essential for a business and for sailing through tough times, it is probably the single most critical aspect. Limited liquid capital combined with a lack of easy-to-liquidate assets are a perfect recipe for disaster during such times. We recently published a well-received article about “The Liquidity Advantage in Business” and it’s a powerful insight for anyone looking to explore the topic.
An essential thing here could be your credit score. While the pandemic and the recession take their time to go away, an added capital at times could make a business survive through the tough time. For that, a good credit score could be very useful. There are ways in which credit scores can be strengthened over time and sometimes a loan can help with that too. A simple search online would yield lots of ways for anyone to be able to work on it when required. The main advantage of a healthy credit score would be having the ability to get financial help at a better cost, in any situation that may call for it.
Can Your Business Hedge on Diversification?
Hedging in investments/businesses is a way to ensure that not all eggs are in one basket – if one basket were to fall, some eggs should remain in another basket so not all is lost in one blow of destructive winds. For example, a business that depends on spot (current) oil prices, can hedge by owning stake in future oil prices or prices of commodities that tend to move in terms of pricing, in the opposite direction of oil like Natural Gas. Another example would be a luxury watch store owner also investing in a store that sells cheaper watches and provides repairs and replacement parts so when the time comes that lesser people can afford luxury, the basic’s business can be hedged upon. A further net of safety can come in the form of adding other products to the shop, like lighting, accessories, etc. It is ultimately down to the stakeholders of the business to understand the right way to hedge a business when required.
So, the answer to this question would only be known to the stakeholders of the business. Some businesses can be diversified easily while some may need out-of-the-box ideas. Then again, there might be some businesses that simply don’t need to or just cannot afford to. But generally speaking, diversification is a tested way to reduce risk.
Re-strategizing to Suit Tomorrow
A lot of businesses were set up when market conditions were very different from what one could expect in the upcoming days. Have you revisited the strategies that make up your business? Have you revised the policies to accommodate the current situations keeping the near future in mind?
Strategy typically from top-down, but businesses today need to welcome inputs from grass-root level and from the shop-floors and also research better ways that can help the company through tough times and develop to accommodate what’s changed in trends, customer expectations and legal requirements. It is more important now than it has ever been, to understand the new market and strategize to suit it.
Another important thing here is to refrain from wrong strategies. This is a time of pressure and to some businesses this might mean cutting costs. That can be a great idea but is a double-edged sword. We have seen a lot of companies cutting down on costs in a way that are detrimental to their business – in either serving their customer or in terms of employee satisfaction.
Whatever steps be taken, it should always be kept in mind that humans are likely to be the most important resources in an organization and motivation gets the best out of employees. Till when it is possible, it is essential to ensure employees remain motivated through the tough times too.
Lean with the Business but not Mean with the Consumer
The other people who frequently get affected when a business goes lean on costs, are the customers. Ideally, no customer should ever find cost-cutting in an organization evident to the products and services. This is an easy way to lose customers and take a hit that cannot be reversed easily. When being lean in business practices, it is a good idea to reduce the impact of that on the end-user. For example, if you own a restaurant that serves meat, it is okay to change our vendor to a cheaper one as long as the meat quality is still similar and the service is still reliable. But a significant change in output can lead to an exponential drop in revenues and that situation can sometimes not be recovered from. In such a situation, better ways to cut down costs could be to choose more efficient transport for the raw material, work on managing stocks and supplies more efficiently, reducing wastage through creative ways, etc.
Again, ultimately it’s a business decision that needs careful examination by the business stakeholders just like any other critical business decision.
Rounding it up – 9 Ways to Safeguard Your Business during a Pandemic Recession
Summing up the above discussion in actionable points, here are the 9 ways in which you can reduce the impact of the pandemic recession on your business:
- Ensure healthy liquidity and cash flow
- Strengthen your credit score whenever earliest convenient
- Reduce costs wherever it does not affect the output
- Switch to targeted marketing from conventional means
- Diversify your business if possible
- Avoid strategies that can demotivate your team
- Refresh your practices, policies, products and services to the current times
- Acquire customers from competition
- Deliver consistency to customers
Individuals and business can use loans for improving credit scores, increasing liquidity and sailing through a tough time. At Business Advance Lenders, we offer flexible loans with quick and lean processes, that can also serve poor credit score holders. Browsing through our services can help your find the right choice for your business.