The crisis involves not only a change in working conditions, customer care or loss of business. It is also about breaking down established stereotypes and finding new opportunities.
The crisis makes us reconsider the company’s strategy, take a new look at the business and look for new incentives for development. With the right behavior, it can become a time to realize the opportunities opening up, allowing to increase market share, optimize business processes and facilitate the acquisition of new partners.
Of course, not everyone can pass this test. Small businesses, which are the most vulnerable in the crisis, will suffer particularly heavy losses. The viability of a company depends on how its owner will behave in the near future. There are several rules that should be followed to try to protect your business from fatal losses.
- One of the most important measures in the crisis is to reduce costs to the lowest possible level. Expensive repairs or complex marketing research should be postponed until calmer times. Analyze the prices of competitors of your suppliers – perhaps you will find someone whose prices will be more favorable, it will also save money.
Evaluate the performance of each employee and break up with those who are not doing much good. Now you have a good opportunity to optimize your staff. But it is also important not to overdo it, otherwise, there will be simply no one to work with. There must be exactly the right number of employees to be able to do business.
- Streamlining finances, reducing appetite for risk. Reduce the number of credits as much as possible. If the demand for your products drops, your monthly loan payments could ruin you.
If you can’t do it at all without new loans, at least choose a bank that doesn’t overcharge your credit rates.
- Review the list of your debtors, leave only those whose financial solvency you have no doubts about. Stop the relationship with those who delay payments. If a company pays irregularly in “peacetime”, the situation will get even worse in a crisis.
- For those companies whose business is based on imports, it makes sense to look for their domestic counterparts. If this is impossible, it is worth insuring currency risks. This can be done with the help of forwarding currency contracts, which allow you to fix the currency rate on the day of the contract and buy it at a later date. If the exchange rate of the ruble decreases during this time, it will protect you from losses.
- Set up reports to improve its efficiency and transparency. Transparent reporting will give you an advantage both in negotiations with potential investors and in communication with regulatory authorities. It’s easy to do with Mageworx.
- Attracting money to the company. Think about which assets you can sell, lease or pledge if the situation gets worse. Real estate, machinery, equipment – all of this can be tried to sell or used as collateral to pay off debts, and premises can also be rented out.
- Revising the strategy. Evaluate in advance what niche in the market your company occupies, it will give you the opportunity to maneuver. You will be able to react quickly to changes in the market situation and change the strategy in time.
In times of crisis, companies of stable sectors, which have no appetite for credit risks, get opportunities for development. For example, my partner has a firm – the manufacturer of economy class paper napkins which in 2008 was reoriented on production for other segments of the market and “ate away” a part of the market from the competitor of a premium class. When people start counting money, it always comes in handy for producers of cheaper products.
Also, pay attention to government purchases or tenders held by large companies. You may find new customers or open up new markets. It is common knowledge that being close to “big money” can help you get over the crisis more easily. For example, in the midst of the Great Depression, highway construction was started. The government wanted to reduce unemployment through road construction, and the construction companies thus had a good chance of survival.
- Pay special attention to the sales system, to improve its efficiency. Adjust the target audience of your products. Develop new regulations and an incentive system for your sales staff. Take advantage of advertising opportunities on the Internet. Arrange promotions and special offers where possible to attract additional customers.
- Restructuring or repurposing. Think in advance about whether there are niches in the market where your company could go in case of a strong decline in demand. For example, a tailoring studio may well be transformed into a clothing repair firm as an anti-crisis measure. In the crisis, people buy fewer new things but repair more often.
- And perhaps most importantly. Don’t ruin your relationship with partners and creditors, even if the situation is trying to force you to do so. If you understand that you will not be able to fulfill your obligations in time, be sure to report it to the bank or partner. Honestly warn of any difficulties and remember that the bank is interested in finding a mutually acceptable solution with you. Your reputation depends first and foremost on how honestly and openly you interact with your partners, and unlike the crisis, it will remain with you forever.
Like a tsunami or typhoon, a crisis will not last forever, sooner or later it will end. People living near dangerous areas, can not avoid a natural disaster, but try to prepare for it well – to strengthen the walls of the house, build protection, stock up on food. It’s the same in business: the better you prepare for hard times, the higher chances your company will survive them without dramatic losses. It has long been known that not the smartest, but the most organized survive a crisis.