Surviving the Credit Crunch
Retain key staff
While job cuts may be necessary in some circumstances, you should always try to retain your key employees: their strengths will help you through an economic downturn, and you will need them when business picks up. You could use any dips in the market as an opportunity for key staff to develop new skills and coach newer members.
Keep your customers happy
In difficult times it becomes harder to attract new customers. Therefore, it is more important then ever to maintain loyalty amongst your existing ones. Consider ways of developing and rewarding customer loyalty, such as selected discounts (especially for early payment), regular mailings or loyalty cards.
Keep on marketing
The marketing budget is often the first casualty in a recession, but smart businesses continue to market through a downturn and position themselves to take full advantage of the upturn as soon as it starts. In tough times the marketplace becomes more competitive – you may need to market more vigorously, not less.
Beware of cutting prices
If receipts begin to taper off, beware the temptation to cut prices. In a recession your costs are likely to inflate and as a result you may struggle to cover this expenditure. Cutting prices can also have the negative long-term effect of devaluing your image in the marketplace. Remember that suppliers might raise their prices as well, so try to negotiate a long-term discount with them.
Keep on top of credit control
Accumulating outstanding debts is always dangerous for a business, and it is all the more likely in difficult times. Make sure you have a clear policy for collecting debts and that customers are aware of it. Above all, ensure you enforce it. Pursue outstanding debts with letters and telephone calls, and threaten legal action if necessary. Ensure that your terms of business allow for adding interest on overdue accounts. If your terms set credit limits, stick to them and stop supplying as credit limits are reached or bills go unpaid.