Despite the economic recovery and boom over the last decade, recent financial forecasts predict that the next few years are not going to be as rosy. While businesses can make some moves to prepare for downturns, the truth is that sooner or later those who are not prepared have a much greater chance of failing than those who learn to roll with the punches and are ready for them. With that in mind, here are some ways to prepare for the upcoming economy.
Refinance Old Debt at a Lower Rate
Many companies carry a certain amount of debt. There’s nothing wrong with this in a normal economy, as long as you have not not overextended yourself. However, when the economy turns, it can be a lot harder to make those payments as they become a larger percentage of earned revenue.
One way businesses manage their debt load is to refinance at lower rates. As the economy slows, interest rates often drop as well. Now may be the perfect time to refinance, given historic low interest rates, which can help you lower your payments by a considerable amount.
Look at the Market and Areas of Demand
In a recent blog, we covered k-shaped economies, in which different parts of the economy recover at different speeds. In times like these, it can be hard for businesses to thrive if their area is not one that is recovering at a fast enough pace. However, shrewd brands look for ways to capitalize and branch out.
Instead of waiting for the recovery to come to you, figure out how you can reach the recovery. Are there new ways to sell your goods? Are there different services you could offer that would be in demand at this time? What new ways to market could you use to reach those who are recovering? There are always answers if you know how to ask the right questions.
Consider That There can be Bright Spots in Each Market.
In the book “Switch: How to Make Change When Change is Hard”, Chip and Dan Heath cover the issue of how difficult it can be to succeed during tough times and point out that by finding “bright spots,” you can identify repeatable practices that can turn into overall success.
Finding these small, repeatable goals that can be considered “wins,” you can maintain an adaptable approach, even in circumstances other’s dismiss as impossible. These goals can create a culture of progress even in tough times. It might not change your bottom line over night, but it can help change your mindset, resist declines and add up to sometimes incremental, other times expansive growth over time.
Consider Alternate Uses for Your Products
An economic downturn is the perfect time to do a little bit of soul-searching. While you might have always thought of yourself as one type of company, selling a specific sort of good or service, you have to get creative to stay afloat when the situation gets less certain.
Of course, you do not want to start over from scratch. The good news is you might not have to go to that extreme to survive. However, you might need to get a little creative and see how what you have done in the past can still exist in this new reality.
Find New Markets
Tough times mean hard work. If you think opening and running a small business is hard work, but with a slowing economy, challenges increase. What used to be a reliable market may dry up, your advertising return on investment can decline and your quarterly reports suggest everything that was working before no longer does.
This does not mean it is time to stop; it means it is time to adapt. Try advertising in new places with new methods. Consider developing new products, or growing your existing line. Ask how your current lineup can adjust and adapt to bring in new clientele. Yes, it is going to be difficult, and it is going to require more from you than you have ever put in before, but it is not impossible.
Maintain Available Working Capital
This is where we come in. There is no doubt that you will also need to reevaluate your sources of funding. New markets and growth require new capital, and your current lenders and strategy may no longer work. Rather than knee-jerk reactions and doubling down, take this time to evaluate many options and to identify new ways of planning for and sourcing funding.
From lines of capital to short term fast funding and funds amassed in fixed assets, we are able to help you find the path, create the stepping stones and establish a repeatable pattern that you can rely on in the new year. Whatever your needs are – refinancing your debt, expanding your product line, trying out new marketing strategies – you need to be sure you can financially weather whatever comes next. Talk with us today about consolidating your loans and finding ways to remain flexible with working capital.