With the US Federal Reserve’s repeated interest rate hikes to tame inflation, economists are watching with concern as the global economy slips into a downturn, with some insisting a recession is already underway. The UK economy is already in one.
The Russia-Ukraine conflict, China-Taiwan tensions, and the new strain of COVID-19 also have influence on any global economic slowdown. These factors can impact businesses in the Gulf, which is why business owners must look for strategies right away to help sustain operations during a period of turbulence.
The most recent recession, which began in 2007 and lasted for 18 months, was especially damaging. Many companies were forced to close or significantly reduce their operations during that time. As a result of the Great Recession, entrepreneurs were forced to re-evaluate their business models and strategies. There are several ways that companies can prepare for - and overcome - a recession.
Cash is king
Companies will need to conserve cash to survive a looming recession and make sure they have an emergency fund in place.
Think long-term
Keep an eye on the future when making business decisions. It is easy to get caught up in the present and make a decision you may regret later.
Be close to customers
Know how much customers will be willing to pay for a product or service that can help them through difficult times. Holding on to your existing customers will be the best way to sustain your business.
Cut costs
Research can help determine when to buy inventory and make strategic moves to position the business better. Negotiate with suppliers, cut non-essential spending, and streamline processes.
Increase efficiency
Find ways to do more with less, such as by automating tasks - and finding ways to work smarter rather than harder.
Diversify your revenue streams
Look for ways to diversify your revenue stream so that you are not as vulnerable to changes in any market.
Be Innovative
Create new products, services, or ways of doing business to stand out. During a recession, your business will be much more likely to succeed if it can offer natural substance, innovation, and value.
Stay flexible
Be prepared to pivot and change course as needed in response to changing market conditions.
Build a robust online presence
Ensure your business has a robust online presence and is well-positioned to take advantage of more potential consumers shopping up.
Keep employee morale high
There are better strategies than termination of employees during a recession. Fear of job loss only adds to the stress. Ensure your team is engaged instead of cutting corners at every opportunity. It's more expensive in the short term but pays off in the long run.
Preparation and finding ways to outperform competitors are essential to creating a recession-proof business. Taking these proactive steps now, companies will be better equipped to weather any potential recessionary challenges.
