Celebrate during the good times, but prepare for the worst. If you accept this fact, you are more likely to be equipped to deal with the cycle of a downturn as it is important to be mentally prepared for any eventualities. Whether you have been successfully running a business for years or whether you are a new business owner, some basics of dealing with bad times remain the same.
Plan ahead
Every business goes through its fair share of ups and downs. Especially in the first few years while you are still trying to stabilize. The secret lies in planning ahead for any unfortunate event. The steady stream of projects you once received may no longer be as regular. Clients might be feeling the heat as well and may want to cut down on expenses. If you have a spread out customer base with a good mix of those who pay well and those who do not but are regular, you may just manage to survive these times. Get at least a few long-term contracts in place with clients who may not pay as well. This way you will at least be assured of consistent work over the months.
Network
The importance of networking is the key to success for any business! This point cannot be emphasized enough! Make sure you spend enough time on a regular basis to network with your business contacts. Maintain good client relations and being in touch with prospects on a regular basis is more likely to tide you thought bad times, than keeping in touch with only a specific set who have given you more than enough work.
Saving for the rainy day
Managing your finances in an efficient manner is a must for any business owner. While you may have your fair share of expenses, refrain from placing all your profits into that fancy sports car you always wanted or on your ambitious expansion plans because the market seems so inviting. Instead, save up for the rainy day and go slow on your plans. Reserve a part of your profits every month and invest it into low risk instruments. This will also help your money grow.
Explore your other skills/diversify
Every business has its key areas of strength. If a certain industry is going through a downturn, see if you can apply your business strengths to another set of clients. This is mainly possible with the service industry as the concepts of servicing can be easily re-applied to different target customers. On the other hand, if you are a home based business, you might want to wait it out and see what else you can apply your skills to. It is more a question of being positive and creative! You might also want to consider temporary full time employment.
Cutting back on expenses
While your business is going through a down turn, the quickest way to save money is to cut down on unnecessary expenses. You might not need the unlimited call plan or the extra internet bandwidth anymore. Tighten you business belt. Give discounts to customers to keep them from going to competition. Also, most importantly, focus on maintaining a good relationship with your bank.
Economy bites all of us. And if you are a business owner, you can feel the pinch more than the rest! But it is a reality one has to live with. The world is not perfect and your business is as vulnerable to the onslaught of bad times as anyone else's. With these tips you will know what to watch out form.
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