After three years of dealing with challenges brought about by the global pandemic, many enterprises face new threats, such as rising costs, supply chain problems, and other issues that could disrupt the company’s operations. Business leaders are currently facing the highest inflation in four decades which is estimated to have reached more than 10% last October, and the impact is felt more even strongly by small enterprises.
According to a recent survey by Goldman Sachs among owners of small businesses, almost 80% of the respondents feel that the US economy has worsened compared to the early months of the year. More than 90% of them are also starting to worry that a recession may happen in 2023. This makes it even more difficult for them to stay afloat, especially since most have not recovered from the pandemic’s effects.
The future remains unpredictable, and it is always good to be prepared for any eventuality. Here are some of the strategies that you can consider to protect and maybe even grow your business during challenging economic periods:
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Manage Your Working Capital
The US Federal government is quickly increasing interest rates to prevent a wage and retail prices hike. But while the objective is good and is meant to help out businesses in the long run, the short-term effect poses a great challenge for entrepreneurs.
To protect your company, your finance officer should focus on managing your working capital and ensure that the balance sheet remains stable. Try to extend maturities to remove immediate financing pressures and hedge some of your floating rate risks through swaps or term facilities.
Spend Wisely
Aside from the inflation that is currently happening, there is also the looming threat of an economic recession. When it becomes necessary to operate in an environment where the costs are unpredictable, business leaders need to take control of expenses through deliberate decisions in purchasing, production, logistics, and operations.
Ensure that your accounts receivables are kept low, and preserve your cash flow in anticipation of lower revenues. Work closely with all the departments and identify critical areas where you can reduce costs without damaging your foundation.
Build A Strong Brand
This may seem counterintuitive, but you must ensure that your brand stays strong and thriving in times of crisis. When consumers are financially constrained, it’s not that they stop spending – they just need to be more careful and deliberate about their purchase decisions, and this is where the power of your brand comes into play.
Remember that a brand comprises all the experiences, memories, stories, and relationships a product or service has with its customers. In a nutshell, it gives customers a reason to choose one product over another. More than the features or benefits that a company can offer, what matters more now is whether the consumers can trust you to give them the right value for their hard-earned money. Since digital marketing is one of the most cost-effective ways of promoting your brand, it is best to work with a credible digital PR agency that can guide you and recommend the right strategies for your business.
Keep your Employees Engaged
Employees can easily get frazzled when they feel the pressure of inflation, both as a consumer and as a worker. This can affect their productivity and may even challenge their loyalty to the company, which is the last thing you want when juggling so many things in the air.
Take time to communicate with your employees and share what you can about the company’s plans for navigating these business challenges. You could also ask for their suggestions and recommendations on ensuring that these plans are executed properly at the ground level. Doing so will help ease their worries and make them more involved and invested in what is happening in the organization.
Encourage Innovation And Creativity
Sometimes, a crisis can bring out the best in people. This is because necessity forces people to think outside the box. Usually, fear makes people take pause or hide away bold ideas on the shelf for future consideration, preferring to stick to the tried and tested formula rather than take a risk with something they have never tried before.
However, what every company needs to do during hard times is to reinvent the wheel. What used to do well before when the business was thriving may not be the best option during this time, when problems are being thrown at you from all sides. Therefore, you need to encourage your employees to be visionaries and game changers so that the company can stay ahead of the competition.