Indian economy is going through the slowdown phase as GDP is decreasing since the last four quarters. Every now and then, we come across the news about Job cut, business closure, increasing pressure of debt/loans repayment, Stress – depression problems and so on. Recently, Nomura Holdings– the Japanese financial company mentioned that the GDP of India may reduce to 5.7% in April-June 2019 Qtr and may further reduce in the next quarter. The situation may get worse if any technical – structural changes are not made.
But we need to stand strong, even if there is an economic slowdown
So, here are some tips about how to deal with the slowdown in business
Optimize Cost and Processes.
During the slowdown, you get the time to analyze what are the business expenses or cost, which you can reduce or optimize. You can analyze operational processes and optimize it to reduce cost. Like if you’ve hired consultants or contractors you can reduce their hours, Unnecessary rental cost can be curtailed, can Identify unwanted admin expenses, wastages. This will lead to cost reduction. You can establish precision in operational processes, analyze and reset HR hierarchy, process hierarchy. This helps the business in better and faster performance in the future.
During the slowdown, you get time for networking with your existing customers, past and dormant customers. Refresh or restart the relations with the customers. This you can not do when business is booming. Networking with customers shows your commitment and builds trust among the customers.
Networking may also generate new opportunities for sales. By discussion with customers, you can know about their requirement and can start sales of new related products also. Like selling of spare parts, machinery services, etc.
Cut Fixed cost.
During the slowdown generally prefer not to increase fixed cost, like buying immovable property, furniture, etc. Because these are not readily saleable items when needed. So may create a problem of cash crisis for the business. So cut the fixed cost and heavy expenditures.
During slow down keep close watch on liquidity, the cash position of the business. Credit collection policy should be aggressive and lesser credit should be extended to the customers. You can also ask or revise the terms with suppliers and ask them for extended credit. Instead of placing bulk/ huge quantity orders, you can place periodic multiple orders which may reduce your investment in inventory and improve cash position.
During slow down cash position or liquidity helps a lot for the smooth and stress-free running of the business. Because of good liquidity, you can also grab new business opportunities.
Slowdown gives the time to analyze and improve. You can innovate and employ new technology and processes, which may enhance revenue generation.
So, Slowdown is the time to be more wise, disciplined and innovative.