Best Tips to Handle an Economic Crisis
In times of crisis, the golden rule is to keep your mind and perspectives open. Contrary to popular assumption, staying connected to the market of supply and demand, as well as the market of entrepreneurship and the possibilities it may provide, is critical during times of crisis. The objective is not to "freeze" all activity, but to work hard to emerge stronger from the crisis. In the Richest Man in Babylon, George Clason mentions the secrets of investing.
Build Customer Loyalty
- Make an effort to keep your current customer base. This will be less expensive than prospecting for new clients.
- Maintain monthly predictions and keep a careful check on your cash flow.
- Invest even if the market is unfavorable. A good opportunity is still a good chance, whether or not it occurs during a crisis.
Negotiate with Your Suppliers
- Do not hesitate to negotiate longer payment terms, lower material prices, and discounts (if paid on time)…
- Do not limit yourself to one (or a few) regular suppliers. If ever the crisis hits him seriously, you will inevitably and automatically be just as affected.
Maintain a Good Image
- Take care of your relationships and brand image, whether with partners or consumers, now more than ever.
- Don’t overlook Advertising and Marketing, which can help you keep a significant competitive edge.
Diversify Your Assets as Much as Possible
To avoid being too severely harmed by the economic and financial crisis, it is essential to diversify your assets and maybe revise your asset allocation. You should be active in the financial, real estate, equities, and bond markets. You should also restrict your exposure to the riskiest assets, particularly stocks of firms in industries weakened by containment of the pandemic.
Keep a Long-Term Vision for Your Investments
Do not panic and sell your belongings! During a downturn, not all equities are terrible buys. Even while it's safe to tailor your investments to your risk tolerance, it is critical to maintain your cool and take a long-term perspective of your assets. The recession is only short, and assets that have been harmed during this period (if they have sound fundamentals) should rebound during the expansion era. What's important is the long-term worth of your capital.
Have a Well-Stocked Emergency Fund
We're not immune to income loss in the current environment - whether it's partial unemployment for workers, a decline in sales or fees, or a loss in revenue for professionals and traders. This is why it's critical to be prepared to meet this period with a well-stocked emergency fund. Your precautionary reserves should equal around 6 months of earnings, giving you enough time to obtain help to which you may be entitled (unemployment, financial aid, etc.), and to recover.
This article is part of our Business Coaching blog series. At Dataczar we talk to a lot of small businesses. We’ve found a few books that we keep recommending time and again. To better help our customers, we’ve added a Reading List for Small Businesses to our website. We encourage every small business owner to read and keep these timeless business books on their office shelf.