5 things you should do if the economy slows in 2019
With all the volatility in the stock market the pundits are beginning to look at 2019 as a year poised to slow down. Some have even said a possible recession.
Of course, some of this might just be hysteria, which the market has been known for. Paranoia, concern and uncertainty can turn the markets upside down. Even in really good times a wrong comment or reports that were unexpected can cause a sell off or serious dip in the averages.
Just because you might be paranoid doesn’t mean they are not out to get you.
What if the talking heads are correct and 2019 sees a reversal or at least a pull back from the amazing market run ups we have experienced of late. Is your business in a position to weather yet another economic storm? What should you do if they are right and we do see a downturn?
Remembering 2008 -2009 is probably a good guideline for taking action now. If you are a business owner who was operating then and are still in business you have the answers. History is a good predictor of the future especially when it has been lived and is relatively fresh. Ten years is not that long ago in business time.
Fast forward to the eve of 2019 and we are again faced with a similar set of economical circumstances, maybe not as draconian but worrisome nonetheless. If hind sight is 20/20 the most important steps to take now are:
Scour the P&L for opportunities to reduce costs.
- At this point everything is on the line.
- Don’t assume any line item is untouchable
Renegotiate existing contracts, vendor and supplier prices
- When the economy slows everyone is in the same boat and reducing margins to keep customers makes sense.
Make sure you stay in front of your clients
- The last place you should cut back is your marketing.
- Get more creative in your messaging
- Make sensible attractive offers to potential clients.
- Make sure you are in front of your audience on all platforms, media and channels.
Adjust payroll cost
- Consolidate employee responsibilities to reduce payroll costs
- If absolutely necessary reduce staff size.
Explore Merger and Acquisition possibilities
- Look to your competitors and suppliers for acquisition possibilities
- Adding sales or additional service lines
- Add market share
Using my company as an example we attacked the challenges head on. Facing a reduction in sales approaching double digits belt tightening became the watchword. All agreements, contracts, pricing structures, head count and every expense line item were examined for savings. Extras, splurges and the shiny objects were put under the microscope and jettisoned as unnecessary. Streamlining the budget to reflect the new cash flow was the primary goal. Fortunately, we were successful in negotiating more favorable rates from some of our long time vendors and suppliers, which helped tremendously.
What we did after that was the most important things we did for survival.
We doubled down on our own marketing. We turned up the fire under all of our channels – print, mail, cable TV, social media, blogging and of course serious networking. We needed to capture a larger slice of a shrinking market.
Simultaneously we pursued acquiring synergistic companies and were successful closing three deals. The result of the deals was stopping the bleeding of reduced sales and cash flow. Bridging the top line gap was critical in allowing the company to function without becoming invisible in the marketplace. It also allowed us to build critical mass that the lending institutions looked upon favorably.
I don’t believe that even the most dramatic prognosticators are predicting a repeat of the 2008 -2009 recession but any down turn will ultimately touch all businesses and forewarned is forearmed.