By Michelle Wanjiku
Starting a business is the easy part; running a successful business is another thing altogether. It doesn’t matter how good your business idea is, if you don’t make smart decisions and plan in advance, your business will fail.
When it comes to owning a successful business, you need to be ready for any issues that come your way. One such issue to expect is tough economic times. Most businesses close because they are unable to ride out the tough times but if you have plans in place to handle such a situation, yours won’t be one of them.
So how can you ensure your business survives tough economic times?
1. Reduce Costs
One of the biggest reasons why businesses fail is poor spending. You don’t want the cost of running your business to be more than the money you are making from it.
Bad economic times obviously means that you will not be getting as much income as you are used to. This means that your business will likely suffer a cash shortage. When this happens it is time to cut down expenses.
Your goal should be to spend very little so as not to work at a complete loss. This means that anything that is not considered a necessary cost should be cut out of the spending budget.
This way you will manage to save a little more and avoid your business going broke.
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2. Have an emergency plan
Failing to plan is planning to fail. Starting a business is a risky affair and such you should always have an emergency plan in place. You should always keep in mind that there will come a time when your business won’t be doing so well.
You will need to come up with a financial backup plan so that when your business is not earning as much money as it normally does, you can still cater to the running expenses. Having an emergency fund set aside will help you deal with cash flow problems when they arise.
3. Focus on customer satisfaction
A happy client is more likely to recommend your product or service to more people. Word of mouth is a great way to market your business at no cost and you also get customers who actually want to pay for your product or service.
You need to ensure that your customers want to return. Just because you are experiencing tough a time doesn’t mean the quality you offer should suffer.
Customer satisfaction will give you more return clients which are great because they are usually more willing to spend on your product.
4. Avoid bad debt
You might be tempted to take up loans to help you navigate the tough times because your business is not earning as much as it used to. However, it’s important to remember that loans can also be fatal to a business.
You don’t want to owe more money when you are barely making enough as it is. You might end up paying from your own personal finances which can leave you broke.
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As an entrepreneur, you need to be ready to face challenges when trying to build your business.
Tough economic times are to be expected and your business will suffer if people stop spending. However, if you plan properly, you won’t have to shut down your business.
Michelle is a Communication Officer & Digital Marketer at Career Point Kenya. Email: firstname.lastname@example.org.
By Michelle Wanjiku