To remain viable and profitable, you must plan for a period longer than the recession, perhaps a year or longer. Always see it as getting worse and cut on your expenses as your consumers are cutting their costs. One thing for sure is to be always one step ahead of the recession. Still have plans ready and do not wait to see the real effects to kick start those survival tactics.
Reduce debt
The more debts you have, the more cash you need to make your interest and principal payment. When a recession hits, less money is coming into the company, and access to capital slows during a downturn. Companies can overcome debt obligations by issuing equity. If a company thinks the recession is coming, it should deleverage.
For example, during times of economic difficulty, many governments will authorize generous budgets to aid its citizens. Hong Kong is the same, and many grants, rebates, and loans are being made available. Your business needs to know of the government assistance that you can seek. One of the best examples is to take advantage of the Export Manufacturing Fund, which could help your expansion into foreign markets. This will help increase your customer pool and allow you to follow the demand.
Invest in your customer relationship
Focus on your current customers by creating the best results and experience for them instead of investing so much in attracting new clients. It is much easier and cheaper to get a repeat client through excellent service and delivering on your promises than a new one through advertisements and other marketing strategies. Happy clients, in turn, bring more clients by sharing their experiences with other potential customers.
Plan your finances
You do not know how customers spend; however, you can estimate their spending patterns and adjust accordingly. Be sure you are attracting your ideal clients and have finances in place way ahead before you need it. It is always advisable to look for finances before you desperately need it, and when there is no high demand for the financial lending facilities.
This means it is important to look at your own accounts and manage your finances. When you are in a recession, every dollar counts. It is important to plan your money and cash flow. Paul Hype Page is a trusted advisor in the region, with years of experience, and we can assist in your annual compliance needs.
Position your business for success before the economy starts to slow down by recognizing that you have a choice to be a business owner who adjusts needed to leverage the opportunities that inherently arrive in a recession.
Build your network
Guanxi is a Chinese word meaning personal connections, relationships, or social networks. It involves a long-term approach. It emphasizes fostering relationships or social connections based on mutual interests and benefits. Guanxi management focuses on maintaining relationships with particular people through the exchange or reciprocation of favors. Connections with the right firms in your sector to help to improve your Guanxi.
As a professional service firm, Paul Hype Page has worked with businesses from various sectors. If you are looking to incorporate into the Hong Kong market, you will be able to join our extensive network of like-minded business owners.
Increase productivity and avoid layoffs
Layoffs are not just harmful to workers but are also costly to companies. Hiring and training are expensive, so companies prefer not to rehire when the economy stabilizes.
If you opt to reduce salary, start by cutting overtime hours or reducing their rates. Then reduce the working hours. By reducing the working hours, you are reducing the salary. To be more productive, start by lowering your salary. Be honest with your employees by showing them the books and letting them know that the profits are dwindling.
Specifically, there are schemes such as the Employment Support Scheme. Schemes such as this can aid you in tiding over difficult periods. Paul Hype Page has had years of experience in the region and has developed working relationships with many of the administrators in charge of these schemes. We can assist in your application and ensuring your business is compliant with the requirements.
Invest in Technology
Recession or downturns encourage the adoption of technologies. This is because despite the tight money situation when few people are willing to buy what you are offering/selling, operations of the company need not be kept at maximum capacity, which frees up the operating budget to fund IT initiatives. Also, digital technology can help cut costs. Technologies can make your business more transparent, efficient, and flexible. The investment in technology makes companies more agile and thus better able to handle the uncertainty and rapid change experienced during a recession.
Conclusion
Businesses face varied and unique challenges during recessions and economic downturns. Navigating the pitfalls before they appear and knowing the avenues to seek help without prior knowledge is difficult.
Fortunately, you do not have to be alone in this. Paul Hype Page was established in 2008, we have handled recessions before. We can share our knowledge of business planning, as well as the options available to seek assistance. WhatsApp us today!
FAQs
You can still start a small business during a recession. Many small businesses thrive in a recession when they tackle the right market with the right products. If you have no clue what business to start during the economic downturn, you are welcome to consult with a Paul Hype Page’s consultant.
Yes. Stocks tend to fluctuate a lot in a recession. Thus, having a steady cash flow is the best bet.
Yes, if you have the budget. When your competitors are cutting down on marketing efforts, the cost will go down. This enables you to get a better return on your spending.
Financial factors, the overextension of credit & debt, expansion of the supply of money & credit by the Federal Reserve & the banking sector, and unforeseen crises like wars and pandemics can cause a recession.
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