How To Keep Your Business Successful During the Recession

The main driving force behind any business is profitability and longevity. In these times of recession, businesses sometimes operate at a loss because of reduced consumer demand. You might have to implement some drastic changes in order to weather the tough economic times.

Reducing costs - We first tackle decreasing costs and expenditures, as this might seem the easiest to address. The first thing to address here is usually the operating expenses. In the course of running a business, you have your usual operating costs, which might include personnel salaries, rent, purchase of raw materials or inputs, and other utilities. Unless you're running a purely service oriented business, you literally have to spend in order to earn.

The first things you can address in reducing costs are the overhead expenses. These are the costs that don't directly translate to output, but may be necessary in running your business. For example, you pay for the monthly lease. You pay for utilities like electricity, telephone bills, water, and the like. It's difficult to reduce the rent outright, because then you would have to look for other office space, which might require a costly transfer. But you can reduce other overhead expenses by reducing consumption. You can turn off the air conditioner during lunch breaks, for instance, or you can reduce the telephone lines only to the number necessary. Or you can switch to VoIP to save on long distance costs.

Then you can also reduce personnel costs. This might be a squirmy subject, but if it really is necessary, then your business should streamline. You can perhaps reduce the number of administrative personnel, and focus instead on keeping those that directly contribute to the company's output or sales. Or you can employ contractors rather than full-time employees, so you can save on spending for benefits and other taxes.

The key to surviving recession is keeping costs to a minimum. You can't afford to overspend, because economists predict that it will take at least a year or two before the economy gets back in shape again.

Improving revenue - For a business, increasing revenue might seem harder than simply lowering costs, and this is especially difficult in a setting where the economy is growing slowly. While the first thing that might come to mind is increasing output and sales, this might not be the best option when consumer demand is low. One way to help improve sales in a recession is by being aggressive in marketing your products and services. Your aim here is to widen and expand your customer base, and so when you spend on marketing, you also improve revenues.

However, given that marketing usually eats up money, you can focus on below-the-line marketing instead, which means you use marketing mechanisms that are not too expensive. Instead of doing expensive TV and print ads, your business can turn to viral marketing, such as blogs, social networks, and even direct email marketing to help spread the word about your company.

Another way is by expanding into different markets and products. Your current market may already be saturated with similar goods and services, but you can target other locations or other demographics.

Businesses rely on profit for survival. How well your business succeeds during the recession will depend on your strategy for improving revenue while keeping costs at a minimum.


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