According to Trading Economics, the most recent unemployment rate in the United States was reported at 9.60 percent in August 2010. Notably, in November 1982, the unemployment rate hit a record high of 10.82 percent; in May 1953, it reached a record low of 2.50 percent. Therefore, the 2010 statistics are justifiably alarming. Still, there’s hope. “The majority of small businesses will survive the recession,” said small business owner and CPA, Gene Marks. Business owners can accomplish this feat by applying specific strategies.
Minimize Delinquent Accounts
Keep the amount of customers that owe you money to a minimum. Delinquent accounts are especially hazardous during a recession. When a recession hits, people are financially wounded, finding it harder to pay their debts. They also have a tendency to declare bankruptcy during this time. If most of your customers are swimming in debt, a domino effect occurs, which adversely impacts you as well. Pay special attention to customers who pay on time and those who don’t. Devise collection strategies to enable prompt payment from chronic late payers. If necessary, require that customers whose accounts are repeatedly delinquent pay immediately upon receiving service.
When a recession hits, business owners tend to cut costs, including advertising. But you must promote your services to stay in business. Just be mindful of how you advertise. Using the wrong mediums to promote your business can result in a waste of money. Ensure that your advertising methods are effective and related to your customers’ needs. Find out what your clients are looking for, establish solutions, and advertise accordingly. Since people don’t buy as much during a recession, it’s critical that you maintain an edge over your competitors. Offer discounts, or introduce new services that consumers want but are lacking from your competitors.
Be Careful of Drastic Changes
If you’re thinking of expanding or making drastic changes to your business, during a recession is not the time to do it. Concentrate instead on making it through the recession. If changes are necessary, they should be carefully researched, tested, and monitored. Evaluate how the change will affect your customers and the business before implementing it.
Make Use of your Clients
Ensure your customers value your business enough to recommend you to others. If they like what you do for them they will become your supporters. One of the surest ways to gain new clients is for your customers to become your advocates. During a recession, many businesses neglect current customers, shifting their focus to finding new customers. Treat your existing clients well. They will respond by referring others to you.
“We have seen CEOs of large auto companies leading lavish lifestyles in the midst of requesting bailouts without a financial plan,” said Marks. “We have seen million dollar companies suddenly disappear without explanation.” Small business owners who beat the recession pay attention to–and learn from–the mistakes big-time companies have made. They gain wisdom from the experiences of others who have faltered. Ultimately, a recession makes small business survivors more cautious, conservative, confident and stronger.