Business Survival Strategies for Tough Economic Times

Actually, I probably should have stopped with just titling this post business survival strategies since virtually the same strategies help a business survive in tough times as in times of plenty. The difference is that, in tough times, your business can decline precipitously while in good economic times, potential failure hides behind the relative abundance available. In good economic times, poor management, poor customer service, lack of innovation, and strained finances hide behind a robust sales figure.

Business Survival Strategies for Tough Economic Times

Business survival strategies start now

But, make no mistake, good economic times can lull you into a false sense of security and your business faces failure when the next financial challenge raises its head. Crafting business survival strategies isn’t something you do when times get tough. Developing survival strategies, along with contingency plans, must be part of the DNA of your organization.

The past twelve months have certainly been tough for many businesses and their leaders. If you felt the strain of operations curtailed due to Covid restrictions and lower sales as customers sheltered in place to avoid illness, you’re not alone. Businesses with careful planning husbanded their resources for just such stresses and built workable contingency plans allowing them to quickly pivot to the new world reality. Those without this planning and buildup of resources quickly closed their doors despite government efforts to support businesses in this tough time.

Elements critical in your business survival strategies

Keep customers happy

A primary goal of your business must involve ensuring customer satisfaction, even customer delight, and there’s no time to worry about this once things get tough. By then, it’s far too late. Every day, your business must focus on everything from management to product quality to anticipating logistical challenges to avoid disappointing customers.

Business Survival Strategies for Tough Economic Times

Customer satisfaction doesn’t start with customer service. Instead, customer satisfaction avoids the need for customer service by avoiding problems that commonly prompt a request for customer service. By addressing customer needs before they require intervention from a customer service rep, you increase customer satisfaction and reduce costs.

Among the keys to customer satisfaction are:

  1. Communication that’s open and honest – own your mistakes
  2. Managing expectations – never overpromise and deliver on promises
  3. Being proactive – for instance, if you anticipate a delay, don’t wait for customer complaints. Inform them of delays as soon as you discover them
  4. Understanding what’s important to customers and giving them that
  5. Making customers whole in the case of failure
  6. Being present – don’t force customers to search for you to get satisfaction after a failure

Happy customers are loyal customers. Happy customers with relationships to your business built over repeat interactions with your brand forgive the occasional failure and willingly support your brand through the tough times.

Build a sound management team

If you want your business to do well week after week, you must have a flexible team in place, whereby there is always someone in charge who knows what they are doing and has carefully thought-out plans for when things go wrong, so they don’t scramble to find solutions on the fly.

A sound management team’s value goes beyond just forming a strong foundation of your business survival strategies, it ensures customer satisfaction by creating employee satisfaction, which reduces turnover (that often results in poor performance) and motivates employees to their highest level of performance. Happy employees work harder to make customers happy.

Ensure financial health

Of course, one of the most vital aspects to include in your business survival strategies is ensuring sufficient cash flow with financial resources held in reserve for challenging times. To build financial health fast, look into customized business financing solutions that might help you generate the capital management strategies you really need.

According to a US banking study, 82% of business failure comes through poor cash flow rather than an inherent inability to generate profits.

When income matches expenses, you might think you’re doing ok. But, you might still struggle. Hence, think of cash flow as your monthly bills. You make some money at a certain rate and you pay your bills on a defined schedule. If you don’t have money on hand to pay a bill, you incur costly fees or you must take out a loan to pay the bill, which incurs interest.

To ensure you have sufficient cash flow, forecast cash inflows from customers and when you receive the cash since some revenue doesn’t show up immediately. Next, enter the due dates of your expenses such as payroll, bills, and other expenses, ensuring you take advantage of discounts offered by vendors for prompt payments. This statement of cash flows highlights times when you might run low on funds and, when used as part of your business survival strategy, shows how much cash reserves you need on hand. By planning for these needs, you ensure your money works hard for you by allowing you to invest excess funds while reducing the costs associated with poor cash flow.

Offer something new

A lot of the time, surviving as a business means one thing: adapting. As long as you adapt to the situation at hand, you’ll find you’re much more likely to stand the test of time, and if you want to simply survive another year, then there is a clear way to do this: just make sure you offer something new.

Recognize that the world constantly changes and customer desires change along with that. For instance, a few years ago, flip phones were all the rage. Now, unless you offer the newest technologies, such as 5G and high-quality cameras, you don’t even get a second look from customers purchasing new phones. Similarly, your competition doesn’t sit idly by and watch customer demand change. No, they’re out there developing the next big thing and they’ll leave you in the dust if you continue offering the same old thing to customers.

And, when I talk about new things, I don’t just mean new products. Your business practices must meet current customer demand and you should work toward anticipating future customer needs. For instance, many small businesses only offered a simple 1-page website pre-pandemic. Upgrading this skeletal website for online ordering is a herculean effort that takes time and, especially as you see profits plunge, money. E-commerce isn’t new by any means (I taught one of the first e-commerce classes in the country in 1999). By now, you should have built the foundation for e-commerce in your business even if you didn’t implement the change until the pandemic forced everything online.

Minimize bureaucracy

Often, businesses go under for the silliest of reasons. Outside of cash flow issues like those discussed earlier. one of the most common reasons that a business suffers is because there is a lot of red tape that gets in the way of success. For instance, empowering front-line employees to solve problems reduces customer satisfaction. In college, I worked for a major department store and we were forced to get a buyer’s signature to do any kind of return for a customer. Sure, this might have saved a few pennies by stopping folks on the sales floor from making a fraudulent return but the resulting customer dissatisfaction finally forced the store out of business.

Final thoughts

I hope this post helped you understand the impact of business survival strategies on your long term success and you begin crafting these strategies today. If you have questions or comments, please share them and I’ll try to answer them as best I can. Also, if you have ideas for future posts, I’d love to hear your ideas.

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Author: Angela Hausman, PhD

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