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Your business and the crisis: How to survive the recession

Posted on Thursday August 13, 2020

Your business and the crisis: How to survive the recession

In the economy as in life, nothing is always smooth sailing, but being a business owner means knowing how to navigate through sometimes turbulent waters. Fortunately, a period of economic instability called a “recession” is a cyclical phenomenon that you can learn to deal with.

We’ll walk you through the various strategies you can use to get through this period of uncertainty.

Getting the facts straight: Seeing the recession for what it is

Balance and imbalance: the economic cycle has different phases we must adapt to. As part of this reality, recessions are periods of cyclical downturn attached to an economic recovery. Since 1970, Canada has experienced five recessions, all of which were followed by a period of economic expansion.

On May 1, the verdict was in once again: the C.D. Howe Institute confirmed that Canada entered a recession in the first quarter of 2020 due to the COVID-19 crisis.

Taking action: Turning contraction into opportunity

Faced with financial setbacks, you may sometimes feel like burying your head in the sand and letting the storm pass. But knowing what really lies ahead and facing it is the best weapon. The enemy is always less threatening when you know how to prepare yourself.

Foresee a turning point in your business

Whether the economy is rolling along or slowing down, standing still in the business world is rarely a good strategy. Be proactive! It’s important to stay in the game and regularly update your structure to adapt to new realities. That way, market fluctuations will have less impact on your business.

Have a long-term vision: The sun will come out after the rain

What if this time of scarcity were an opportunity to review your strategy and business model? This slowdown gives you the luxury of time. By asking yourself the right questions, you can turn this period of adversity into a springboard to boost your business toward new and promising opportunities. This will make it easier for you to position yourself well in the subsequent recovery.

Has e-commerce caught your eye? We’ve been hearing a lot about it since the beginning of the crisis, but there’s a lot work to do between having an idea and actually implementing it. If you’re considering the possibility of launching into digital marketing, read our tips for getting into e-commerce with a solid strategy behind you.

Expanding your offerings and your clientele

Like a squirrel stocking up for a long winter ahead, it’s important to arm yourself with all the resources still available. As the numbers begin to drop, you’ll be able to hold out longer if spring is late.

Win over new clients and think outside the box

Your customers are the heart and soul of your business! Faced with the current public health crisis, you’re likely to lose some or even many of your most important clients. Rather than waiting for this situation to throw you head on into a recession roadblock, find new customers and invest in new markets in sectors less affected by the pandemic and the economic downturn.

Diversify your offerings: Be flexible and open-minded

Looking for new clients may mean changing or diversifying what you have to offer. How can you use the infrastructure, staff and experience already in place in your company to offer something new?

Without doing a complete 180, you could consider moving 25% of your offerings to another industry if your business model is adaptable to another market. For example, some brandy producers have shifted to producing disinfectant gels, while some restaurateurs have turned to the charitable sector, such as the Comal y Canela Restaurant, which now offers a food bank to Toronto residents.

Preparing yourself psychologically: Acceptance and transparency

It’s not just the health of your wallet that’s important for the future: your mental health is also key. Maintaining a psychological balance despite the ups and downs of being an entrepreneur is essential. Taking care of both your physical and mental health will allow you to live more wisely in the future and in the present.

Recognize signs of trouble and seek help

Becoming aware of what is happening to us inside and accepting that we’re going through a difficult period is a sign of strength, not weakness. For business leaders, the desire to be infallible often outweighs the need to pay attention to our emotions. Take the time to focus on what’s really going on in your mind.

Psychological distress is widely experienced in the world of entrepreneurship, where responsibilities and doubts are part of daily life, a phenomenon highlighted by Radio-Canada. (Article in French.) If you feel mentally vulnerable, don’t hesitate to seek out professional support around you, because help is available. Removing overwhelming emotions from decision-making processes is essential: anxiety or anguish will never be good guides.

Support and communication: Stay in tune with your team

It’s important to maintain bonds of trust. In historical times like the one we’re going through, staying close to those around you is a big challenge. To avoid isolating yourself from your team, include your employees, keep them informed of the developments and difficulties related to the company and talk to them openly about the cutbacks you had to make.

As an employer, you have a key role to play in listening to the needs and concerns of those who work for you. During a crisis, you’ll benefit from taking care of the mental health of your employees, who rely heavily on you as their primary work-related authority figure, as Telus Health explains well.

Taking care of your finances: Careful and preventive management

The bigger the rollercoaster, the tighter you have to be buckled in. Coping with the ups and downs of an unstable market takes financial planning and caution. Sound asset management will help you make sense of the numbers. Don’t be afraid to look at them! Paying attention allows you to anticipate obstacles and get through them better.

Cash on hand: Switch to asset protection mode

Protect your cash flow well. Adequate working capital should provide you with enough cash to meet your current expenses for at least two months. To make sure it does, you can create your own document with regular updates to your income and expenses over a period of about 10 weeks. This document will allow you to build a profile of customer income and payments to your suppliers and employees in real time—helping you plan for periods of reduced cash availability and your possible financial needs.

Invest cautiously in an uncertain environment

Your cash flow status may force you to delay certain major investments. Take this pause for what it is: a break to regain your strength and re-evaluate your plans. In fact, it’s quite possible that diversifying your activities or taking advantage of new opportunities will transform the nature of your investment projects. For example, the planned expansion of a building could turn into the opening of another business location in another area, as it did for René Trailer Sales, or the acquisition of a nearby building put up for sale at a good price on the real estate market.

Turn suppliers into allies

Transparency also applies to your suppliers. Offering staggered payments to some of them can be a great way to weather the storm. A supplier may prefer to maintain a certain volume of business and get paid later than to see its turnover drop drastically. We win as a team. Your suppliers need you the way you need them, your employees and your customers.   

You aren’t alone: the recession is global. Together, we can find solutions to come out of this stronger. UNI is here to support you in your time of greatest need in your community because helping each other is the co-op’s deepest purpose.


You might also like :

The COVID-19 crisis: We're helping your business get through it
Investments and COVID-19: How to protect your assets
Entrepreneur profile: René Trailer Sales' initiatives for weathering the crisis

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