No business has survived the era of COVID-19 completely unscathed. During such uncertain times, business owners have been faced with numerous challenges: layoffs, pay cuts, plummeting sales, and reduced profits. The reality is that many businesses will need to find ways to continue operating even though they’re not currently making money. The businesses most likely to survive will be those that figure out how to operate at a loss until the economy begins to recover. Below, we look at some business growth strategies you can put in place to weather turbulent economic times and keep your business afloat until profits return.
1. Take more control of your inventory
If the margins are tight, every piece of inventory matters. When operating at a loss, you need to know exactly what is on your shelves and how much of it you have. Ensure that you have effective inventory controls and accurate reporting. Also, review the demand for your existing inventory. If you need to scale back your product range, you’ll want to know you’re ditching the products with the lowest demand or that generate the least revenue.
2. Review and reduce operating expenses
A budget shortfall is an ideal time to review your operating expenses and eliminate costs that no longer benefit the company. Check for subscriptions to obsolete or unnecessary software programs and expendable services like professional cleaners or lawn care. Many businesses bring more tasks in-house when the going gets tough, rather than shelling out for third-party services or providers. Communicate with your team that everyone will need to do more with less. This is a hard but necessary conversation, and a loyal team always appreciates honesty.
3. Provide more value to your customers
People will not buy things they don’t need when the economy is not doing well. As a small business, you have to be aware that customers are consciously cutting down their expenses. If you’re offering products that they can live without, your bottom line will inevitably be affected. You can mitigate lower revenues by coming up with ways to add value to what you already provide. Consider offering flexible payment options or unlimited services for a fixed annual fee. Customers may start acknowledging the savings they can get through your offerings. While you may not grow your customer base, it may just be enough to retain some loyal patrons, who you’ll need in your corner until things get better.
4. Join the right platform to increase visibility
Collaborating with related providers can help drive more sales. It’s beneficial to partner with other SMEs within a supportive network where you can help each other out. Partner with people who offer services that are downstream to what you provide, like a shop offering accessories that pair well with your clothing. Find providers you can work with who offer valuable trade-offs that will benefit both businesses.
5. Make cash flow a priority
As a small business owner, you need to ensure that your company has access to cash, especially during a crisis, but taking on too much debt can make it impossible to grow when the economy finally improves. A business loan may be necessary to keep the doors open but borrow carefully. You don’t want to trap yourself in a cycle of debt while your competitors find their feet and start growing again.
Remember, cash flow and profit are not the same thing. Just because you start selling your products or services again, doesn’t mean you’ll have more cash on hand. This is the risk of too much debt; your profit disappears immediately into your debt payments. Think about life beyond recovery, rather than just your immediate needs, and don’t lose track of your long-term business goals.
Survive a cash flow crunch with Bartercard
Keeping an organisation afloat requires prompt decision-making and a careful plan of action. Consider joining Bartercard Australia. At Bartercard, we offer all our members an interest-free line of credit and accept an alternative method of payment using trade dollars to free up your cash flow. This is a great way to meet the core demands of your business without shouldering extra expenses while your belt is tightened. Open your business to new customers and increase sales opportunities, even during a crisis! Want to learn more? Contact us today.