How to safeguard your company from an economic crisis
It’s been almost ten years since the last economic crisis started. While we like to think that we have left the worst behind, recent events tend to differ. According to many economists, a recession is brewing. The heralds of it have already appeared. There is an increase in inflation and a decrease in growth in many major economies. But, this isn't a reason to feel depressed. You can still protect your business. Read here how to safeguard your company from an economic crisis.
1. Don’t put all your eggs in one basket
Try not to rely on a single major client. It is better to have multiple clients from different backgrounds and industries. Diversification of your client database will soften the negative effects of the crisis as your customers will be impacted differently.
Focus more on highly lucrative clients, but don’t ignore the small customers. They may potentially offer less profit however, in an economic crisis you can never be certain who will be hit the worst.
2. Check and improve your customer relationships
Check your relationship with your customers. Has the client delayed payments in the past? If yes, you should check why and how often. Communicate with your customers and try to maintain a healthy and professional relationship with them. There are more chances they will pay if they feel more attached to you.
3. Is your business model still viable?
Maybe you’ve been doing business for many years. Maybe your business model has been successful for you. None the less, you should make sure that it will be as good, if not better, in the future and especially in the case of an economic crisis.
Re-evaluate your processes and minimize cost as much as possible. Improve your profitability by decreasing your expenses and increasing your margins. Depending on your industry, you might be able to gain income from multiple sources like e-commerce. Check your competition and their business model for inspiration.
4. Learn from history
Check past crises to see if and how your industry was affected. Of course, circumstances might have changed. Still, data is always a good indicator of how your market will be affected. Industries that deal with necessities, like food, are not affected as much as others. But if your market is niche, then you are more at risk from an economic crisis.
Be careful. Prepare contingency plans and alternative options for suppliers to reduce the effect on your daily operations and supply.
5. Keep investing in marketing
When reducing expenditure, it is normally the marketing department that gets hit the hardest, especially the budget. But this isn’t always a positive solution. Marketing is how you communicate with your customers and show the benefits of your company. During this period, most of your competition will cut down on their marketing budget, but you can benefit by maintaining it. In return, marketing will help you differentiate, and generate more profit.
6. Improve your debt collection policies
No matter how well you have prepared for the crisis, there is still a chance a customer won’t pay their invoices. It is important to collect your unpaid invoices as soon as possible. At Bierens, we employ a highly qualified team of international lawyers with over 60 years’ experience in collecting debts. Having us on your side will ensure you get your outstanding invoices paid.
Do you want to know more about how to safeguard your business? Do you have unpaid business invoices? Then contact us today, we are happy to help you.