9 ways to keep your business resilient in an economic crisis

Are you wondering whether your business will hold up in the months ahead?

Just as you can strengthen your immune system so it can fight viruses more effectively, there are preventive steps you can take to make your business stronger in a crisis.

Here are 9 ways to strengthen your business’s immunity:

1. “Turnover is Vanity, Profit is Sanity but Cash is Reality”

Cash is your most valuable resource right now, and the day-to-day reality of any business. Make sure your company has enough money to get through this period. At the very least, you need enough funds to pay your suppliers, employee wages, and your other urgent, mandatory expenses.

2. Focus on collecting receivables

Keep a close eye on your business relationships and the invoices you need to collect. Any payment delay from customers will affect you directly. Review every receivable you're waiting on and don’t wait until it reaches the due date. Once that moment passes, it will be much harder to recover your money, while your cash reserves stay tied up.

If you have no other choice but to offer long payment terms, Instant Factoring can help you access cash faster. You finance your invoices before the due date and receive the money the next day. You only need a few minutes to create an account and complete the financing application.

3. Negotiate the longest possible payment terms

Just as you're trying to collect your invoice payments faster, your suppliers will do the same. Many will ask you to pay immediately or part in advance, but that will put heavy pressure on your available cash reserves. Negotiate the longest possible payment terms with your suppliers, so you can make your payments and stay in control of your expenses.

4. Your company’s stress test

Do you think your company has enough money to make it through the first 18 months of the pandemic? In the global economy, where Romania’s economy is closely interconnected, 18 months is the time it takes for a new economic cycle to begin, and the ideal timeframe for a stress test for your company.

Look at your last monthly turnover before the crisis began, in February or March 2020, and assume a 33% to 50% drop from that figure.

Take advantage of every financing option now

If you can access a loan or any kind of financing, take it now. An economic crisis is unpredictable, so there’s a good chance you may not be able to access it later. As for the cost of interest, it is much lower than the cost of not having access to money when you urgently need it.

6. Anticipate and be proactive

Think about every key part of your business. Who are your strategic suppliers, customers, and employees? Stay in close contact with them to see whether and how the crisis is affecting them. Any impact on them is an impact on your company. Call your strategic partners as often as possible, show them you’re there for them, and don’t let anything catch you off guard.

7. Cut your discretionary spending as much as possible

Review every company expense and decide which ones are priorities. For everything else, see whether you can cut costs or put certain expenses on pause until the economic situation improves. Adjust your spending today so you give yourself every chance of surviving the next 18 months.

8. Rethink your hiring plans

Even if you've seen a slight increase in orders, it may be temporary, and a new role may no longer make sense later on. Try to use your internal resources, even if this is a busier period, instead of hiring new people and then having to lay them off. A decision like that will affect your entire team.

9. Act fast, don’t hesitate

Your company may feel relatively stable right now, and you may not see why you should take drastic measures. But the economic crisis spares no one. Take every precaution now, while you still have time, so your business has every chance of getting through this period successfully.