By nbkc bank
How an economic downturn will impact your business depends largely on two factors: the type of business you run, and external economic forces. Together or independently, the following conditions are just a few that can cause the economy to slow down:
Surviving hard economic times takes a whole lot of grit and then some, but have no fear — there are ways to set your business up for success in the face of an economic downturn.
Aside from putting on your scrappiest and most imaginative metaphorical hat, there are steps you can take and methods to implement to get your business through hard economic times.
Keep an eye out for the tell-tale signs.
When we know better, we do better. Right? As a business owner, being aware of economic factors at play can help you adapt your company during hard times. Not only can staying informed help you prepare, but it can help you spot opportunities to grow your business, such as low-interest rates or reduced costs of goods.
Gross Domestic Product (GDP) Growth Rate: The GDP provides a kind of economic snapshot. It gives us some insight into the economy’s state of being, overall health, and if it’s shrinking or growing.
Interest Rates: Where are they, where are they going? Are they rising? Is it more expensive to borrow money?
Inflation Rates: What is the value of the US Dollar? What is its purchasing power? How can you make your money work best for you during this time?
Consumer Price Index (CPI): CPIs give you an idea of the weighted average of goods or services, and this number gives you an idea of where the collective U.S. consumer spending is trending.
Unemployment Rates: Low unemployment rates are an indicator of a strong economy. A strong economy influences everything above.
Maintain excellent customer service.
One thing we can’t stress enough in hard economic times is that businesses shouldn’t skimp on quality customer service. Whether you’re facing staffing shortages or an influx of customer needs, taking the time to maintain good client relationships can have a major impact.
Strengthen business relationships.
You’ve no doubt built a few connections throughout your career networking. There’s a good chance they’re in the same boat, and it’s a good idea to reach out. How are they navigating these hard times? Is there anything you can do to help?
And don’t forget about your banking relationship. When your lender is in the know, they can help guide you through loan applications, applying for government programs, and more.
We’re not suggesting that you start cutting back everywhere, but we are suggesting that you assess what areas are feeding your success and those that don’t.
Where can you address operational inefficiencies? Are there non-essential expenses to eliminate? What about capital spending – are there high-ticket items that you can hold off on purchasing?
In short: sweeping cuts could actually cut the company short, but thoughtfully-targeted trims add up for the better.
Work smarter, not harder.
Automation is your friend. Take our Autobooks feature, for example. Not only does it make sending out timely invoices easier, but it also helps you keep track of when (or if) you’ve been paid. What other areas of your business can you automate?
Always plan ahead.
Projections, projections, projections. When you forecast the what-ifs in short and long-term business plans, you increase your business’s ability to adapt. What preventive measures can you take now to lower potential risk? Maybe you diversify your supply chain to cushion the impacts of inflation, or maybe you implement future contracts now to lock in a predetermined price on specific goods. Whatever the tactic may be, you’re creating safety nets for future-you.
Invest in the company.
There are plenty of ways you can invest back into your business, some without spending a dime. Is the team in need of some additional training in one subject or another? Look around for community events or reach out to partners to see if they’d be interested in hosting a lunch and learn. What about the POS system you’ve been using — is it outdated? Maybe it’s time to update to one that will make managing inventory and tracking sales performance a breeze.
One area businesses are quick to make budget cuts in is their marketing, but we wouldn’t recommend that unless it was absolutely necessary. You want to stay top-of-mind with your current customer base and grow where you can — maintaining your market presence is an investment that can’t be missed. Are there opportunities to capture market share during these times of uncertainty and doubt? You may find it’s more affordable to capture new customers and partners while simultaneously positioning yourself for takeoff as the market begins to accelerate.
When you’re in the thick of running a business during an economic downturn, it’s good to know who and what services you can turn to. With our convenient business solutions, excellent service and a “no gotchas” philosophy — nbkc is here for businesses just like yours.
Learn more about our Business Money Market Account and its competitive interest rates, apply for our simple but savvy nbkc Business Account, or get in touch with one of our Relationship Bankers to ask about small business loans today.