With the recession looming over our heads, all businesses are in hot water. The situation is however particularly alarming for SMEs and startups that don’t have a financial cushioning. However, previous data shows, that not every business suffers from economic downfall. Many companies make the most profits during recessions.
What happens during a recession?
- Businesses cut back spending in an effort to increase or maintain profits.
- Hiring stops or slows, raises and bonuses are tightened.
- Individuals spend less on luxury items.
- Governments have less tax revenue to invest in their communities.
- The stock market, government debt, and home prices all continue to suffer under these economic pressures.
Businesses that benefit from a recession
A recession-proof business or business model continues to perform well during times of economic distress, when other business types may be forced to cut costs, reduce their workforces or even shut down. Though such businesses vary from food, health-care, home services, baby product, retail, IT and many diverse categories, they share certain characteristics that help them make it through hard financial times. They provide goods and services that consumers and companies need even when times are tough.
- Sells Essentials
- Offer day-to-day services
- Effective cash flow management
- Serves consumers unaffected by recession
- Sell one-of-a-kind products
- Provide mandated good or services
- Adapt well to changed circumstances
Does that mean, All other businesses die out? Most certainly not!
Guaranteed Sustenance and Growth with an Accounting App
Not every business can be countercyclical or recession-proof, but companies that don’t lie under this category often do exceptionally well during the economic downturn by adapting to change. Experts believe their are a few practices that enable a company to survive any economic uncertainty.
Effectively Manage your Financial Processes
The most common advice given to all businesses these days is to effectively manage their financial processes to stay recession-proof.
- Improve workflow and internal systems to ensure efficient operations.
- Watching your bottom line helps you reevaluate your strategies, smartly cut down expenses while building a reliable cash revenue.
Hands down, the best approach during an economic downturn is to automate as many operation as possible. The level of control, efficiency and effectivity a digital approach gives is incomparable.
Human errors, hiring workforce, needign more staff during seasonal highs are unaffordable during a recession. Moving to a digital approach can significantly reduce losses. Metric’s real-time data and automated processes prevent costly human losses while exponentially increasing efficiency.
A digital mangement solution like Metric’s real-time financial dashboard automatically generates, tracks and stores spending information. These graphs and reports are easily accessible thus letting you analyze your spend patterns anytime.
The ideal situation during a recession is to have a small speed that works at double their speed. What better way to achieve this than to automate? Switching to an accounting software like metric significantly decreases processing time, enabling the workforce to engage in more productive tasks instead.
It is easier to forecast any upcoming financial burden when you have real-time expense data. Metric’s automatic metric tracking ensures timely identifying a problem beforehand to make well-planned decisions.
Recession blues are real. Stressful work environment, uncertainty, and toxicity start to seep in as the external tension increases. The automation provided by accounting softwares like Metric facilitates founders to form a good work-life balance thus enabling a calmer work environment. Digital Expense Mangement apps reduce frustration, save time and improve transparency which is all one needs in stresses and strains of a recession.
Work on Growth
Fear of collapsing brought by recession puts everyone in survival mode. They lay off employees, cut down expenses, function frugally and unfortunately stop focussing on growth. Not growing intensifying your chances of dying out. Adating to the circumstances to form new growt plan at a time most of your competitors slide back could be transformative for your business.
Product and Service modification
Airlift shifting from mass transit to grocery delivery service amidst the start of pandemic, is the prime example of modifying your business model in accordance to the circumstances. This pivot to an in-demand service using your existing resources not only got Airlift fame but they raised the largest startup funding of Pakistan under the worst of economic instability.
Every business can modify their services to cater the need of the hour. However, it can be particularly hard to identify what model would work for you. Metric makes this easier for you with dedicated accountant support in it’s GROWING financial model. Metric’s team of experienced accountants provide one-on-one business consultation to affiliated businesses.
Taking your customers on-board while planning your recession strategy would help you retain more customers. If your customer’s are redefining their spending limits, you might want to shift to cheaper services for a while. You can also add services they currently require to strengthen yur customer base. Relying exclusively on your understanding of the market may lead you to loss, it’s always a good idea to take feedback. Metric offers business Insights that can help you up your customer relationship management game.
Reach out to New Customers
Changing your marketing strategies or your product to reach a different category of audience or to generally increase your customer base is essential for your growth. Even if your ideal target audience is only one socio-economic class, this is the time to alter your operations and diversify your clientele. Metric keeps in check your budget for enlarging customer base by tracking your customer acquisition cost and other such metrics.
Optimize IT infrastructure
Strong IT setup is significant to progress. Metric provides real-time data, cloud-connections, instant access to financial reports, records, metric tracking and insights to accelerate your growth throught digitization.
Keep an eye on your competitors
In a small market like ours, it is essentially important to always be aware of your competitor’s performance. One of the best features of metric is Competition Insights. This lets you analyze their strategy, performance, gowth plan, marketing strategy to make informed decisions that would lead you to success.
Why having an accountant/ accounting app is important during recession?
The chaos when recession hits, most companies let go of their accountancy support to save capital. The business however pays the price since a pragmatic approach during the stress and strain of a recession is key to business continuity and success. An outsider guidance from an accountant is critical to keep your business up and running.
The support of a qualified accountant helps you cut down on expenses that doesn’t effect your growth, manages your cash flow, increases avenues to acquire and save capital, assists in downsizing, offers suggestions in benefitting from government tax reliefs and other schemes. An accountant that can provide all these services might be way beyond your budget given the circumstances.
This is where Metric kicks in. A platform empowering you to avail all these services for the least possible cost. It’s understandable if your small business can’t afford an accountant, opt for Metric to enjoy all the perks of having an accountant without investing the money. Metric offers three financial plans, visit our website to get to know more about us.
If your business requires support in this concerning time, then please reach out to Metric’s highly experienced team of accountants and sign up for our app instantly.