- MEMBER LOG-IN
How to navigate the impending recession
As we face into an impending recession, everyone is feeling the pinch of high-interest rates and inflation not to mention the effects of the recent extreme weather events on our economy. We know a lot of our ACE members own small to medium businesses. Here are our top seven tips for navigating the current financial climate.
Double down on your long-term strategy
During tough times, we're so busy focused on the short-term priorities, we neglect the future or long-term strategy for the business. Research indicates that businesses that can master the delicate balance between cutting costs to survive the current financial crisis and investing to grow their business for the future do well after a recession.
Assess your expenses and identify areas where you can reduce costs. Things like explore alternatives to expensive software or renegotiating with vendors for better rates is a good starting point.
Focus on cash flow
Cash is king during a recession, and you should keep a close eye on your cash flow. Consider implementing a more stringent invoicing process to cope with delayed payments, reducing inventory, or even seeking external funding to help manage cash flow.
Xero's economist, Louise Southall says businesses should also look at adjusting to inflation and recommends not laying off staff if you can given employees have been so hard to find off the back of COVID.
Have you considered diversifying your products, services, or markets to reduce reliance on a single source of revenue? This can help tap into new customer segments or markets, which can help weather the storm of a recession.
In a recession, SMEs need to be agile and adaptable to changing market conditions. Consider new business models, explore new technologies or even pivot your existing products or services to better align with the needs of the market.
Invest in marketing
In a recession, many businesses cut back on marketing budgets, which can be a mistake. SMEs should consider investing in marketing to reach new customers, increase your visibility, and build brand awareness. Explore cost-effective marketing strategies such as social media or content marketing to reach your target audience.
Overall, the key to surviving a recession as an SME is to be proactive, flexible, and resourceful. For more information see Xero's latest article on how to recession-proof your business