economic downturn

How to Survive an Economic Downturn

Don’t panic. Recessions happen. If you create a plan and look for new creative opportunities, you may even come out better than before.
Take Netflix for example. They started as a DVD-by-mail service in the mid-2000s. When the Great Recession hit, many entertainment-related companies struggled to survive, but Netflix changed its model and attracted three million subscribers by the end of 2009 (and its stock price rose by 57 percent).
One of the reasons they were successful, was because they were able to become an alternative to cable and satellite TV services, which were much more expensive at the time. Consumers obviously preferred paying a fraction of that cost for similar entertainment value.
So don’t be afraid to change and evolve in order to survive (and thrive) during economic downturns. But here are a few tips to help you prepare for a recession.

     1. CUT BACK ON UNNECESSARY EXPENSES

If you don’t absolutely need it, don’t buy it. Take a look at your finances and determine where you can trim some of the extra spending. If you’re seeing the signs of a recession, the sooner you cut expenses, the better. Put aside the money you save from cutting expenses early, so you have a reserve to rely on if you need it in the future.

     2. INCREASE BUDGET FOR MARKETING

Now this might seem counter-intuitive after we just advised you to cut expenses. However, when a financial crisis hits, many businesses make the mistake of eliminating their marketing and advertising altogether. When businesses do this, it’s like taking the gas out of a car and expecting it to go the distance. Marketing can give you a competitive advantage to attract new customers and retain current ones.

     3. CREATE AND FOLLOW A STRATEGIC PLAN

Even if you are a small business, you need to have a strategic plan if you want to survive a recession. If you don’t currently have one, now’s the time to create one. Ask yourself these questions:
  • What are the top priorities for the business in the next 3, 6, 9, 12 months?
  • What resources do we need to accomplish our strategy?
  • Who do we need to effectively execute on these plans?
  • What is the goal of our efforts?
It’s important to recognize that you won’t be able to create or execute a strategic plan alone. Find a team that supports your vision and can help you carry it out.

     4. TAKE CARE OF YOUR EXISTING CUSTOMERS

Statistics continue to support the need for businesses to provide positive customer experiences. If you want to survive a recession, you need to focus on building a loyal customer base. It will cost you significantly more time and money to find new customers than to retain existing ones. Even for contractors and recreation dealers, you can take advantage of your customers to get referrals.

     5. BE COMMITTED TO THE BUSINESS

You cannot expect your employees or team to support you if you aren’t willing to do whatever it takes to survive a recession. Put in more hours, cut back your salary, try new creative approaches. Your commitment and dedication will set an example for everyone else in the business.

     6. WATCH YOUR CASH FLOW

It’s critical to make sure you always have a positive cash flow during a recession. Cash flow is the life blood of the business, so keep a close eye on all your accounts. This is where partnering with a reliable bank can come in handy. Instead of trying to collect monthly payments from your customers, you receive the funding from the bank, and the bank assumes the risk instead.

     ABOUT MEDALLION BANK

Medallion Bank specializes in non-prime recreation loans and prime credit home improvement loans. Using over 15 years of professional lending experience, our team works directly with dealerships, contractors and financial service providers to offer quality financing for your customers (including those with past credit challenges). Want to put this blog to the test? Give us a call today and you’ll be able to talk with a real human that can answer your questions.

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