As the global economy currently undergoes the worst recession since World War II due to the global COVID-19 pandemic, businesses need to figure out how to survive a financial crisis. How do they keep their company afloat?
6 key business insights
Using lessons from businesses who have survived the Great Recession, there are 6 business insights every business could benefit from.
Read on or skip to the infographic below to see how you and your business can survive a financial crisis.
- Diversify your investments: Having a mix of investments in different areas can help limit the potential for financial distress, especially when one asset fails to deliver profits. Invest in different areas such as stocks, products, or businesses that would each respond differently to the same event.
- Preserve cash and reduce debt: debt is never a good idea, especially if you fall into an economic downturn. Studies show that companies with high levels of debt are especially vulnerable during a recession.
- Expand your clientele portfolio: During a financial crisis or economic downturn, it’s important to have a diverse customer base. That way you are not relying on just one group and can maximize your earning potential.
- Focus on customer relationships: Building and maintaining a loyal customer base can help you maintain sales. This helps during times of financial hardship.
- Invest in advertising and marketing: This is not a cost you want to cut back on during an economic downturn. Research shows businesses with little or no market presence during a recession face challenges.
- Look beyond layoffs to cut costs: Layoffs might be a short-term solution to a financial crisis. It may end up costing you more money when the market recovers. You’ll need to rehire and retrain employees. Cutting down expenses instead of employees is also a great way to save money. This is great when your business needs cash.
- Prepare for the market to recover: markets tend to recover, so stay disciplined and keep working on improving your business.
How to survive a financial crisis
Whether it’s an economic downturn or an unexpected accident, making the right decisions is important. It can help your business achieve your objectives tomorrow.
This infographic was created by Thimble.