Times are tough, and in this uncertain economic climate, Boston entrepreneurs and their businesses may experience difficulty in finding their footing. Across the world, businesses report lower sales and reduced profit, with many having to lay off their workforce, file for bankruptcy, or close their businesses altogether.
This article considers how entrepreneurs thrive in economies with so much to worry about and how to create a working plan to keep the doors open.
After the COVID wave ended and countries began lifting restrictions, we all thought the world would return to normal. But the Russia-Ukraine conflict soon followed, and the already uncertain economic climate became even more so.
Experts predict that the world may be on the brink of an early-set recession due to the geopolitical crisis and economic turmoil, which may affect its largest economies. In addition, indicators point to rising energy and food prices as some of the factors destabilizing the world’s economy.
The big problem for many Boston businesses is how entrepreneurs thrive in economies with many challenges and uncertainties. For one, making near-accurate financial projections is difficult, as no one can see what will happen next in this uncertain economic climate. The businesses that will survive this new normal are those that learn and understand the trends associated with the prevailing economic conditions. After learning, you have to apply your new knowledge to adjust your business plan and roadmap for the best results.
Cutting expenses and making no new investments are often the strategies that come to mind when dealing with a recession as an entrepreneur in any uncertain economic climate. However, these short-lived strategies focus only on the financial aspect of a business’ growth strategy. Instead, Boston entrepreneurs need a comprehensive economic plan to protect businesses from economic turmoil and leave room for growth. Below, we consider some strategies:
Increased Marketing Investments
While it’s a general opinion to cut spending budgets and pinch resources during harsh economic circumstances, doing the opposite increases your chances of leaving the economic downturn with your shoulders high.
As an entrepreneur, these times present an excellent opportunity to invest more in marketing rather than entering survival mode. Studies have shown that businesses benefit from advertising in an economic downturn, and Forbes reports that companies that increase their marketing spend often experience increased sales that other businesses do not.
Switch to Alternatives
We do not recommend a strict cost-cutting strategy. Instead, we prefer that entrepreneurs switch to alternatives, like a more affordable supplier or buying supplies in bulk to reduce overhead costs.
An uncertain economic climate presents the perfect opportunity to return to the drawing board, go over your business’ accounting books, review the numbers, and make better decisions. Unfortunately, chances are that your business is paying for something it can do without, like an automated software service, for instance.
You can switch to a free alternative instead. Consider patronizing pre-owned stores for business equipment instead of buying a new machine. These are a few ways to cut operating costs and keep the business running.
Drop Late-Paying Customers
This may sound like the last thing you want to hear because, during recessions, businesses are looking to hold on to any income sources available. However, to safeguard your business in an uncertain economic climate, you must make tough calls, and one of them requires cutting clients that don’t pay on time.
In an economic downturn, cash is king, and while offering credit during a financial crisis is a good business move, clients that do not honor agreements are bad for business. Let them go!
Consider Government Assistance
Government assistance is another place to fall back on in an uncertain economic climate, especially if you run a small business. Apply for grants, tax deductions, or exemptions, both at the federal and state levels. Research available government assistance schemes and whether you qualify for them. These can save your business money that can go toward other pressing areas.
Join Entrepreneurship Communities
One of the important things you need during such harsh economic situations is to learn from other entrepreneurs, see what they are doing differently, and learn how they are navigating the situation.
For example, EO Boston connects entrepreneurs and business owners, helping them share ideas on how to grow and develop strategies in their various sectors for an uncertain future. Joining entrepreneurs’ organizations like EO Boston may be what you need to take your business to the next level. See if you qualify for an EO Boston membership today!