A great sailor is made in calm, not turbulent waters. This applies to life as much as business. An entrepreneur organises, manages and assumes the risk of an enterprise.
But how can you thrive in tough economic times? Should you hold tight your purse strings or do what you are called to do — take risks?
If you must take risks, what kind of risks? And how much is too much? These are some of the questions an entrepreneur faces daily, especially when hit by the storm of economy recession.
Kenya’s companies are facing hard times after last year’s prolonged electioneering, poor corporate governance, the increasing cost of production and inflation.
Surviving tough times takes an indomitable spirit, but more importantly it takes skills, perseverance and passion for long-term goals.
How, then, can you recession-proof your business? Implementing these practices will help ensure your business' survival and even allow it to thrive during an economic downturn.
IMPROVE YOUR CASH FLOW
Mumias Sugar, Kenya Airways and Uchumi Supermarket have greatly suffered due to lack of cash flow. Cash flow is the lifeblood of your business; to keep your small business healthy, cash needs to continue flowing through.
No matter how tough times get, having cash flow through your business will help you ride the storm.
INVOLVE YOUR STAFF
Ask your staff to help you look at expenses and figure out where to cut. Engaging your staff in this process is crucial. They need to be properly motivated and to understand that it's a time for sacrifice.
They'll be happy to be part of the process if you get them involved. If you have to bear the burden of an economic downturn alone you are likely to quit sooner rather than later.
CUT OFF UNNECESSARY COSTS
There are costs your business can cut to stay afloat. They range from electricity consumption to office tea. The University of Nairobi is cutting costs using these measures. Efficiently handle your appliances and office equipment also plays a role in cost-cutting.
You can do something to reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Just because you've always ordered goods from a particular supplier or done things in a particular way doesn't mean you have to keep doing them that way — especially when the other ways may save you money.
In a recession you need all the help you can get, investing in the right technology will help your staff work more efficiently and satisfy your customers more easily.
You could cut a lot of costs if you are a tech savvy entrepreneur who maximises the use of apps for enhanced productivity. Market your business aggressively. If your business has to prosper in tough times you need to continue expanding your client base, which means drawing in customers from the competition.
In tough times businesses often make the mistake of cutting their marketing budgets to the bone or even eliminating them entirely.
I call for a slight increase in your marketing budget during turbulent times. The need to remain competitive and visible will help you stay afloat in the long run.
Consumers are restless and looking to make changes in their buying decisions. You need to help them find your products or services by getting your name out there.
So don't quit marketing. In fact step up your marketing efforts. How can you do this? By offering something more or something different than the competition. Research your competition and see what you can offer to entice their customers.
GOOD CREDIT SCORE
Hard times make it harder to borrow as business loans often disappear. With good personal credit, you’ll stand a much better chance of borrowing money needed to keep your business afloat.
To recession-proof your business, keep tabs on your personal credit rating as well as your business’ score. Do what's necessary to keep your credit ratings in good shape.
DIVERSIFY YOUR PRODUCTS
There are opportunities that arise as a result of a recession; you just have to know where to look.
Recessions are often the best time to take the risk that makes one an entrepreneur.
This may be a time to expand your business portfolio and invest in areas that present an opportunity.
Why? Recessions don’t last forever. And once things improve you will be glad you were buying when most people were selling.
Also, look for ways to broaden the appeal of your products. This way, you may not just be maintaining and growing your business, you could equally be adapting it for a different market.
OFFER VALUABLE CUSTOMER SERVICE
The last thing you want during tough times is losing customers. Your clients are your lifeblood during an economic downturn — you should fight to keep them.
It is time to become better in meeting customer demand and deliver on schedule. It is time to be flexible and reliable too, if you really want to satisfy and retain customers.
Finally, tough times don’t last but tough people do. The above expert advice will go a long way in helping you through your business’ economic storm. Nothing will make your business 100% recession-proof.
But implementing the above practices to recession-proof your business will help ensure your business survives tough times and even make some profit.