Even the very best businesses and business models are susceptible to hard times. They can come about due to pandemics, market crashes, bad publicity, political climates, and many other factors. How your business may come to face a hard time may not be clear. However, you will face hard times. Here is how you can prepare yourself.
Build Cash Reserves
The novice business owner will take all their profits as payment. Unfortunately, this leaves their business entirely unable to handle any unexpected expenses. A much wiser approach is to build up reserves of cash. That way, if the business goes through a period of low profits or faces other troubles, they will be more prepared to deal with them. One way that this may happen unexpectedly is through pivots. A business pivot is when a company changes direction in response to the changing industry. Pivots cost money. If a business has cash reserves, it can successfully pivot in a hard time to stay afloat. If a business has no cash reserves, it may be unable to make a pivot and go bankrupt when major industry changes occur.
Creative Customer Incentives
When the general economy is facing a hard time, most consumers will stop spending on their wants and only focus on their needs. This tends to further increase the economic difficulty. Offering creative incentives is a great way to entice your customers back to your stores. For example, rewarding loyalty can improve sales and keep your customers happy. Another option is to offer bulk discounts like, “Buy 1, get 1 half-off”. These bulk discounts will appeal to your customers’ frugal mindset as they try to weather the economic downturn.
Insuring your business can help compensate your business when things get tough. You can insure your business against potential lawsuits, natural disasters, and in some cases loss of profits. While you can’t insure your business against your poor business management, some insurance companies offer policies that will compensate you if your business loses its ability to make a profit due to circumstances that are deemed outside of your control. You may find yourself thinking that you don’t want to pay insurance costs, but you’ll be glad you paid insurance costs if you ever find yourself needing help from your insurance company.
As mentioned earlier, it’s pretty much guaranteed that your business is going to face challenges and hard times. Now is the time to prepare for these things. Don’t just put it off for another day. Being caught unprepared could cause countless hours of your hard work to be destroyed. On the other hand, by being prepared, you can be in the prime position to turn tough times to your advantage.
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