How Entrepreneurs Can Survive Economic Uncertainty

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The global pandemic has upended the economy rather quickly as businesses around the country were forced to close due to the lockdowns, and many will not reopen again. For entrepreneurs with trying to launch a startup, the situation is even worse as investors have pulled mainly back from risky investments at this point. 

The impact of economic uncertainty is that millions of business owners and entrepreneurs are rethinking how they can survive in the current environment. For some, the answer might be that it is better to close rather than trying to fight on. While many other entrepreneurs will double down on their dream and do whatever they can to keep their business afloat. If you find yourself in the second category, then here are some tips on how you can survive economic uncertainty

Be Candid With Your Team 

When times are tough, one of the worst things you can do is to internalize the stress. Instead, you should be candid about your situation and ask your team for ideas on how they can help. Doing so will allow you to gain a different perspective on the issues plaguing your business, and possibly a way out. 

Being candid will also give you the flexibility to make the tough choices when the time comes. This is important in times of economic uncertainty as it means that you and your team will not be operating under pretenses. As such, others can make decisions about their situation, which might include leaving your company before it is too late. 

Lastly, you also need to have candid conversations with your suppliers as your ability to pay may be severely constrained during this time. Keep in mind many of your suppliers are facing the sale situation, and this can be used to your advantage as their goal will be to continue their sales, and this means they will be able to negotiate. 

Cash Is King 

Survival during times of economic uncertainty comes down to one thing – cash. As such, your primary focus must be on how you will preserve enough money to finance your business. Think of your money as a resource, and once you spend it, you might not be able to get it back. 

While you will need to keep a close eye on your expenses, you do not want to run your business into the ground, either. The key is to control your costs by spending money on things that will give you an immediate return. 

If you need inventory to run your business, then focus on only buying the inventory items which sell quickly. In your company has a physical location where you need to display your inventory, then concentrate on merchandising tricks such as spacing out products to give the appearance of your shelves being full. Even an extra quarter inch between product will have a significant impact on how much product you need to keep on your shelves, and this will reduce how much cash you have tied up in inventory. 

Look At Your Cost Of Service 

Sadly, the cost of servicing customers is not often talked about, but it has a significant impact on your business. This is the reason why some customers are more profitable than others. While you cannot afford to lose any customers during this time, those customers that are costing you money should not be a priority. 

This can be a tough decision to make, especially if the customer in question has been with your business for a long time. But by focusing on finding and retaining profitable customers, your business will be in a better position to survive. 

Look For Growth Opportunities 

This might not seem like the time to expand your business, especially if you are barely hanging on. But now might be the right to look for growth opportunities because many of your competitors are not. 

The growth opportunities could be in your local market, such as finding ways to remain open while your competitors are forced to close or cut back their offerings. Or you could look at how to expand your business online as your customers are no longer just in your town but are around the world. 

One example of this is Mount Sopris Instruments in Boulder, Colorado. While other American manufacturers were moving their base of production overseas, the company has consistently expanded its manufacturing in the U.S. While the scale of expansion will depend on how quickly earn a return on your investment, there are times when it makes sense to grow while your competitors are under pressure. 

Do Your Homework 

If you want to recession-proof your business, then you need to start by learning how to do it, not in theory but practice. This includes looking at what funds are available to you from the Small Business Administration as well as programs from your state or local government. Do not finish there, also look at your supply chain and your relationships with your customers to find out how you can remove risk as much as possible. Doing so will not only position you to survive the current economic slowdown but future disruptions as well.

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