The economy grows and shrinks in response to thousands of independent variables. No wonder, one can hardly foresee a financial downturn, and that brings us to a crucial question- as the owner of a business, do you know how to keep such a crisis at bay? The following are some of the strategies to safeguard yourself-
1.Diversify your client pool
Your primary job is to diversify your client base or customer base. If you have one major client you rely on, and that client is hit hard by recession, you may lose the vast majority of your business. On the other hand, if your client base spans different sectors and areas, you can still afford to lose a few and survive. You can diversify your pool by seeking to establish different types of relationships with various companies.
2.Have an emergency plan
It is always advisable to know how your business would cope in an emergency. Be it the loss of a major client, cash deficit, significant decline in sales or the compulsion to close one of your physical locations, it is imperative to think things through and have a game plan for business financing ready in case the unexpected happens.
3.Understand the unique demands of your industry
Doing some research into your industry and competition can go a long way in helping you avoid crisis. In this regard, you can seek guidance from mentors and other entrepreneurs who have survived previous recessions. With their firsthand experience and knowledge, you can get a clear idea of whether your industry is one that is traditionally hit hard by an economic downturn or if there are key areas of development that can be pursued for future survival of your business.
4.Prepare for potential budget cuts
If your revenue suddenly crashes or for any reason you find it difficult to make ends meet, the only option to resort to will be a temporary decrease in expenses. In the event of such a crisis, it is in your best interests to have a plan made in advance and to figure out where you can make budget cuts. Consider the following questions- would you keep your budget cuts to one or two departments, or spread it throughout your organization? Would you cut jobs, or decrease your advertising spend? The key is to set your priorities.
Bajaj Finserv is one of the few NBFCs that offers MSME and SME loans with easy business loan eligibility criteria. The interest rate is also low for these loans which are aimed at funding the growth and expansion of small as well as medium businesses. One can avail a maximum loan amount of Rs. 30 lakhs, and it will be processed in just 24 hours. You only need to submit 2 documents.
5.Have alternative sources of income
Revenue loss due to a financial crisis can be avoided by establishing more diverse sources of income and that goes beyond diversifying your client base. There are numerous ways of making passive income through your website and even through new product lines or peripheral sales. The more sources you have, the harder it will be for a recession to crush your business.
You can also consider applying for an unsecured business loan. If you can follow these strategies proactively, you will have a much easier time navigating through the next market crash. It is important to remember that fluctuations are a natural part of our economy and recessions are unavoidable at times.