There’s no “right” way through an economic downturn — jobs get lost, companies shrink, and the prospect of recovery can seem slim. Still, recessions can also pose opportunities to adapt and evolve as a business as well. The best strategy is whatever gets your company to the other side intact, but it can be difficult to know what that might be.
A bleak economic forecast is the most surefire sign that your business should change things up. Every business’s optimal switch-up may look different, but don’t be afraid to experiment with strategies you never would’ve considered otherwise. Here are some worth considering.
1. Joining A Group Purchasing Organization
The COVID-19 crisis has shown just how vulnerable many supply chains are. If the shuttered vendors and late deliveries tell you anything, it should be that it’s time to rethink your business’s procurement strategy by joining a group purchasing organization. Group purchasing organizations, or GPOs, have always been an essential element to a sustainable procurement plan, but the pandemic has made them more necessary than ever before.
GPOs work by leveraging the power of their many members into a large bloc of purchasers, getting better deals and more efficient distribution patterns as a result. This kind of model shift can be huge for small businesses, giving them the power to buy at rates they might never have thought possible before. With the economy not looking to make a full recovery any time soon, it may be time to lock down your procurement — and GPOs are just the way to do it.
2. Incorporating New Revenue Streams
An economy-wide downturn doesn’t become a downturn for your business until income starts taking a big hit. Once you start to see your profit margins dip, you know it’s time to shake things up. The current recession has proved that even during the worst times, some companies still manage to thrive: delivery services, PPE manufacturers, and many more. The key to surviving a downturn might just be expanding your operations to match the newly formed economy.
It doesn’t have to be a complete transformation of your company on a dime: start by gently introducing new revenue streams with the potential to expand later on. As you gauge the response, continually adjust your business plan to match where the money is coming from. Most businesses won’t be able to survive a recession without changing, but it’s equally important to make the right changes when you do. Follow the money, and the results won’t disappoint.
3. Looking For Selling Possibilities
For many small business owners, selling is non-negotiable. To offload your business to a buyer may feel like giving up a child, but prepping your company for selling doesn’t necessarily mean that a sale is the only outcome. A company ready for sale is one with excellent optics, strong and diverse revenue streams, and a future-proof business model — attributes crucial to making a firm successful.
Even so, an economic downturn may just be the perfect time to look for potential buyers. As COVID-19 has shown, recessions can hurt small businesses but they often offer unprecedented growth opportunities for large ones. If your company can thrive during a correction period, it’ll show blue-chip competitors that you pose a potential threat to their position. If your business looks attractive to buyers now, the result might be cash offers too great to ignore during times like these.
4. Embracing Freelancers
There is no aspect of business hit harder by downturns than the workforce. The unemployment rate may still be high, but so are onboarding costs — your business needs a way to continue to grow and self-strengthen without incurring burdensome costs. In both good times and bad, the gig economy has a huge pool of talent to draw from, and business leaders like you need to take notice.
Using freelancers can seem like quite the jump for companies that have yet to embrace them, but the benefits are too strong to ignore. Freelancers are now more experienced and talented than ever before, and there’s no aspect of business today that can’t be supplemented by freelance work. Companies looking to expand or adjust operations without making huge personnel investments should start first with hiring freelancers — the results will speak for themselves.
Navigating an economic downturn is never easy, but businesses that can do it are setting themselves up for huge success to come. As your company looks for a path forward, be sure to leave no stone unturned — you never know which strategies will get you through to the end.
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