The key to longevity in business is managing changing economic cycles. It is something that Avidia Bank’s executive vice president and chief financial officer Margaret Sullivan knows well. In her 23-year tenure with Avidia, Margaret has helped the bank navigate challenging economic times. In today’s article, she shares some helpful guidance on how you can prepare your business for economic challenges, including a possible recession.
- Build up your reserves. Building your business capital can help you prepare for unexpected expenses. You will also want to ensure you have credit lines available in the event that you need to access credit to manage your cash flow or business operations.
- Protect your cash flow. Strong cash flow is essential to the health of your business. You can improve cash flow by managing and reducing expenses and collecting receivables more efficiently. Another way to maximize cash flow is to diversify your business lines to generate multiple revenue streams.
- Reduce excess spending. Uncover areas of your business where you can reduce costs and overhead without sacrificing the quality of the product/service you offer.
- Analyze your business strengths. In addition to saving and managing cash flow, you need to assess the strengths of your business by asking some key questions, including: What does your business do best? What makes you unique from your competitors? What value do you provide to your customers/prospects?
- Emphasize your strengths to win business. Once you determine the value of what you offer, make sure your customers/prospects know about it.
- Cultivate relationships. Instead of viewing transactions or sales individually, view the business your clients do with you as part of a relationship. Get to know your clients and what’s important to them. This will help you build loyalty, which will make your customers think twice about leaving you even in challenging economic times.
- Maintain a good banking relationship. An experienced banker can be a trusted advisor who can help your business navigate challenging economic conditions. If your bank knows you, your business, and your character, they may be more flexible in helping you manage financial challenges that may arise.
In business, change is imminent. However, effectively managing changing economic conditions can be made a whole lot easier with careful planning and prudence during good times.