By Suhaib Mohammed
Economic recessions are natural occurrences that could happen suddenly in any part of the world no matter how strong an economy used to be. When it happens, things change for the worse. Markets collapse, spending power depletes, and businesses shut down most of the time. As a small-scale restaurant owner in Lagos, a day-care proprietor in Lesotho, or a street artist in Johannesburg, what does a recession mean for your small business?
Your Sales Could Plummet
Once a recession hits a country’s economy, a host of economic challenges will arise: income levels will drop drastically as the GDP shrinks. An increase in the prices of goods and services, comes a decline in purchasing power. What this means is that people who usually spend more on your products and services will now spend less and this is bad for your business.
Your Expenditure will Skyrocket
Your expenses during stable economic times are fair. For example, if you spend a certain amount on weekly expenditure, as recession hits, everything goes up. This is because a recession creates inflation and shrinks the size of the economy, making it difficult to purchase goods and unfortunately, no business owner wants to hear this.
You May Fire Your Employees
As the recession continues, things might become uglier to the extent that the cost of your startup operations are unbearable and impossible to maintain. How is it possible to run the business, pay the employees and save some funds afterwards? It’s tough. You may fire your employees or even worse, file for bankruptcy.
You Could File for Bankruptcy
Sometimes even when you fire your employees, things might not turn out good for your business during a recession. A lot of businesses that have experienced an economic meltdown in the pas filed for bankruptcy. This is not to say that any time a recession hits an economy, businesses – by default – will file for bankruptcy, but that anything can happen in a recession. Therefore, prepare for the worse yet hope for the best.
The question is how do you manage a small business during a recession?
As an entrepreneur, it is easy to panic about the effects of a recession, however they can be avoided. You can start by reducing your business expenditure, improving on customer satisfaction, applying lean marketing strategies and by embracing technology. Implementing these steps will help you retain existing customers, get new ones, build authority in your market and in the long run, save your business from going under during a recession.
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