Call it depression, recession, or economic downturn, many are suffering the sting of it — some regions more than others. It can wreak havoc on your business. Just ask all those business owners who went out of business during the pandemic and never came back. That might have been a special situation that only happens once in a lifetime. But that is cold comfort to those who had to file for bankruptcy.
The first thing you need to do is recognize when you are entering a state of a financial challenge at the beginning of the cycle rather than waiting too long to recognize it and do something about it. COVID denial wasn’t just unhealthy for individuals. It was also unhealthy for businesses. Those that were slower to recognize and react to the situation were hit much harder than the companies that were quick to recognize and react.
Once you recognize the problem, you need to do what it takes to secure the necessary resources to get you through. That could mean a small or mid-sized loan. Companies like Western Shamrock were there for small businesses during their worst moments. You want to make sure you educate yourself on the different types of loans available so that you can confidently get the one that is right for you. But ultimately, you have to get some emergency financial help to help you weather the storm’s initial blast. From there, you can come up with more durable solutions. If you want your business to weather the financial storms still raging today, start here:
Your entire business does not have to be subject to an economic downturn in the UK if you have locations in other regions that are doing well. Many things can have a negative effect on your bottom line that are well beyond your control. Not the least among them is politics. You cannot always determine which way the political winds will blow. That is no reason to allow those winds to blow away your business.
Brexit was a long time coming. Many local business owners were caught by surprise when it finally happened. When all your business eggs are in one regional basket, small political moves will make a big difference. Just ask Apple. iPhone production snags due to lockdowns are costing Apple billions. They are working as hard as they can to open more factories in more countries. But until that happens, Apple’s bottom line is subject to political headwinds in China. The retail cry of “location, location, location” might not be a repetition, but a literal warning that you need multiple locations to survive local economic downturns.
Never Mistake Your Product for the Company
The economic downturn can sometimes feel particularly targeted at certain products and services. Mass-market products that are on the edge of being luxury goods will see sales dry up as people decide to put off expensive purchases that are not vital.
This is why it is smart to make a full range of products that cover the spectrum of affordability. Truly luxury products often do well during a downturn because the wealthy are less sensitive to price. And budget items do well as many customers move downmarket during economically turbulent times.
Many years ago, Apple went from being Apple Computer Inc. to Apple Inc. They stopped identifying themselves with a single product line. Facebook made the move from being identified by the blue app, as they call it, to being the metaverse company. If your whole company is dependent on a single product or service, now is the time to broaden your offerings to help you weather future economic storms.
Broaden Your Investment Strategy
You don’t have to suffer because the sector where your business resides is suffering. If you invest in other sectors that traditionally do well during downturns, you will still be profitable. You absolutely need to invest in your own business. But you also need to invest in other businesses.
Your investment portfolio needs to represent the full range of possibilities. If your company specializes in sunny-weather activities, you should also invest in companies that specialize in selling umbrellas and power generators. That way, you win regardless of the weather.
Anyone can be surprised by a sudden economic downturn. But you don’t have to be unprepared. Surf the wave by expanding your locations, your products, and your investment strategies.