The recent pandemic presented all of us with unprecedented challenges in all aspects of our lives. In particular, businesses were faced with prolonged economic uncertainty, disruptions in traditional revenue streams, and unforeseen expenses that may or may not have been covered by traditional insurance policies.
Businesses had to learn how to maintain customer relationships and generate revenue in an unfamiliar landscape that seemed to turn traditional commerce upside down. While many companies were given some relief through PPP loans and other bailouts, you can’t expect this to be the norm every time we enter a time of economic uncertainty. Instead, business owners should take time to establish areas of vulnerability in their business plans and make appropriate adjustments to ensure that their company can weather economic obstacles without relying on external bailouts or help.
Here are a few ways you can safeguard yourself and your business against financial ruin, no matter the economic climate.
Diversify Revenue Streams
Diversifying your revenue streams is one of the most surefire ways to protect your business. As the saying goes, “Don’t put all of your eggs in one basket.” This is especially true during times of economic recession but is also a good rule of thumb at all times. The more ways you can come up with to generate income, the better off your business will be.
According to Forbes, one very effective way to diversify your sources of income is by expanding your product line by adding products that complement or make sense with your existing products.
You might also consider entering new geographic markets. Depending on the size and nature of your company, this could mean expanding into a neighboring town or establishing a client base across the country or even the world.
Many businesses made it through the pandemic by developing new sales channels. Specifically, many brick-and-mortar businesses switched to an online mode. You might want to try this to ensure your business remains sustainable.
Selling advertising on your website is another way to generate additional income and is a good idea to look into, regardless of the current state of the economy.
Implement Cost-Saving Measures
When creating your plan to keep your business self-sufficient, it’s important to consider all your expenses and identify ways to minimize costs. Look at your workforce. Is everyone essential? Is there redundancy among job descriptions? If so, you may consider downsizing your workforce.
Additionally, examine costs associated with your vendors. Is there a comparable product that you can secure for a lower price? If you are paying for services such as website hosting, payroll, or other business-related tasks, do some research to see who is offering the lowest price without compromising quality.
Finally, analyze any brick-and-mortar storefronts or office space and determine if you really need them. A lot of business models have shifted to remote or hybrid from the pandemic. This saves companies thousands in lease payments and rent. Can your company function with a remote workforce? Has most of your revenue shifted to online orders? If so, consider eliminating some of these unnecessary expenses to minimize your overhead.
Foster Strong Customer Relationships
Perhaps the most important component to the success of any business is a loyal client base. This isn’t something you can really take shortcuts to establish. Instead, invest the time and effort needed to ensure your customers feel seen, valued, and appreciated.
In times of economic uncertainty, maintaining communication and strong relationships with your customers can be harder than usual. It can be helpful to get creative with ways to connect with your customers through social media as well as in person. This can be as simple as creating social media posts that drive traffic and click-throughs or having customer appreciation days. The possibilities are endless when it comes to staying connected with your client base, and it’s worth taking the time to brainstorm ideas that make sense for your target audience. After all, without customers, no business can survive.
Prioritize Resilience, Innovation, and Long-Term Planning with an 831b Account
While most – if not all – businesses carry traditional insurance plans, not as many are aware of the benefits of having an 831b plan. This type of account provides an added level of safety when unexpected hardships or expenses occur. It protects areas that aren’t covered by traditional insurance plans and can be invaluable when disaster strikes.
This tax code allows businesses to access funds set aside for uninsured risks. You can tailor an 831b account to meet your company’s specific needs and best complement your business.
During the pandemic, there was a steep uptick in the number of businesses utilizing 831b accounts, and it’s easy to see why. This added layer of protection was the difference between financial ruin and financial solvency for many businesses.