Recessions occur at different times and for different industries across the globe, so the risk is always there for economic downturns to impact your global business. In the midst of so much economic, political, and trade uncertainty, building a recession plan before you need it is a good idea. Below are 3 ways you can prepare your global business for a recession.
1. Build and Diversify Revenue
Don’t put all your proverbial eggs in one basket. Review your customer mix. If any single customer represents more than 10% of your business — or your top five clients together account for more than 25% — you need to diversify. Broaden your customer base by seeking referrals and testimonials, optimizing your online presence, looking for new marketing strategies, expanding your offerings, or pursuing “dream clients.” Go big and broad for revenue sources when preparing for turbulent times.
After securing revenue and while you have the cash, pay off your debts. Knock down your higher-interest loans first, but also consider your relationships— both what you owe vendors and what customers owe you. Keep these important current and future relationships strong because they could provide your company with much-needed flexibility and help you avoid the domino effect of bankruptcy.
This is the time to push creditors for longer terms, discounted terms, and even larger lines of credit. Renegotiating before there’s an economic event is the wise to do before the market-nosedive.
3. Go lean
But don’t go too lean. Trim just the fat by reducing costs and cutting inventory. You want to have just the right amount of inventory to keep up with demand and never stagnates. You’ll also want to review your expense reports line by line and make note of what cannot be cut and what may actually need more resources during a recession. One may think that the time is now to cut back on marketing, but how will new customers learn about your company? Marketing is an investment with an ROI. Pay attention to that, most of all, when preparing your budget.
Using any of these strategies will give your company a leg-up in the world when recessions hit, whenever and wherever that might be. Overall, plan and prepare now before the recession is at your doorstep. Fortunately, going global may just be one of the best recession-proof moves a company can make, because when times get tough there are more places to find economic sanctuary. If your company is needing more specific guidance on how to go global or how to prepare your global company for a recession, contact us at reesmarx, your partners in global recruitment and global expansion.