With financial discipline and conscious efforts, businesses can save money during recession. Here are some useful tips.
1. Buy cheap
Normally, prices fall during recession. This is an excellent opportunity to look for cheap supplies, raw materials and even services.
2. Renegotiate contracts
Businesses must use recession to renegotiate their vendor contracts for lower prices. Most vendors would be willing to lower their prices to retain customers during tough times. When the economy improves, the lowered prices will allow businesses to reap larger profits.
3. Human resources
During recessions, layoffs are common. So, the labor market is usually favorable to businesses during recession. You may be able to hire good talent at reasonable rates. However, have retention strategies so that the talent doesn’t leave your company when the job market improves.
4. Financial discipline
Financial discipline must never be overlooked during tough times. While making business decisions, take into consideration their post-recession impact. Without doing a cost-benefit analysis, both from a short-term and long-term perspective, don’t make crucial decisions.
5. Recession-proof businesses
Explore the possibility of diversifying into businesses that are recession-proof. Industries like health care, debt collection and repair services are not severely impacted by recession.
6. Review spending
A complete review of all spending is essential. Business must be prepared to cut expenses through relocation, divestment and downsizing. The spending review should ideally cover all expense accounts, bonus plans, asset performance and employee hiring schemes.
7. Joint ventures
Consider entering into joint ventures, where you can share production facilities with other companies in the industry. This is an excellent cost-sharing initiative during recessionary times. It may also be worthwhile to evaluate the possibility of entering into joint ventures to share storage facilities or human resources.
8. Think outside the box
During recession, your business must come up with creative and out-of-the-box ideas to cut costs. For example, reduce marketing costs by using YouTube commercials, online presentations and such other innovative approaches instead of traditional advertising methods.