Tough Times Call for Tough Measures: How Solopreneur Businesses Can Prepare for a Recession
Covid has left a long-lasting imprint on the market and small businesses. Here is an ultimate guide on “How Solopreneur Businesses Can Prepare for a Recession”.
Solopreneurs and start-ups face different challenges throughout their business journey. The major turnout for their ventures comes when the economic conditions change since they do not have any outside funding. If you manage to pass out this recession then, your business will sustain and grows but if you fail to handle these circumstances it is obvious that your business has a great downfall or loss.
The Tough Reality of Recession in Entrepreneurship: What You Need to Know
A prolonged period of considerable and widespread economic deterioration is referred to as a recession. There are also more complicated formulas for determining recessions, but simple mathematics indicates a recession when Gross Domestic Product (GDP) growth is negative for two consecutive quarters.
Studies show that this tenure of Economic downturn extends up to 6 months or even more, but it affects the economy so drastically that recovery becomes difficult for several years.
Is Your Solopreneur Business Recession-Ready? Tips for Preparation and Survival
Working as a Solopreneur opens the doors to new learnings and opportunities, but one thing that Solopreneurs need to jot down in their diary is to be prepared, for the good and the bad. Here are some recommendations on how Solopreneur businesses prepare for a recession-
1. Secure your funds
Being a solopreneur, you should be handy with funds so that the last-minute emergency does not affect you and your venture to that extent and you cope up with it easily.
2. Shield your cash flow
Statistics say that 82% of businesses fail just because of improper cash flow management. Don’t let your start-up be part of this data. Following up on past-due customer invoices and setting up an emergency savings account are both examples of good cash flow management. Make sure you have an emergency cash reserve of three or six months' worth of expenses.
3. Cut down on additional expenses-
Another way to prepare your business for recession is to keenly observe your expenses, and try to cut down additional costs. Examine your costs and figure out how to improve the unpredictability of your spending or reduce your overall costs. You can enhance variability while decreasing overhead costs by opting for professional employer organizations (PEOs) or human capital management (HCM) platforms.
4. Protect the revenues-
Utilise unit economics to discover your most profitable sales sources, and then safeguard these revenue channels and the profits they create. This may entail changing your business strategy, optimising pricing structures, and eliminating goods, services, or clients that do not create high-profit margins for your company.
5. Make wise decisions-
During tough times, it's the real test of your entrepreneurship skills, how do you manage things and get your business successfully out of the recession and start from where you’ve left things behind? Your one wrong step may put you in unwanted situations of failure and downfall.
6. Manage your receivables-
Recession leads to financial instability in all sectors, even your customers might take time to complete your payments in a long time. If you need to adjust your payment terms to get through a difficult financial period, plan contract renegotiations as soon as feasible to conclude your pay cycles and reduce your sales overdue figures.
7. Renegotiate
Recession is not only limited to you, but your vendors are also sailing on the same boat. Renegotiate with your vendors, it is the best time to get either good rates for your products or payment terms. During these hard times, your vendor won't will to lose a customer.
Read More: How to be a Successful Solopreneur
Conclusion-
Recession is like your examination in the subject of practical Entrepreneurship. The one who fights and stays till the last is the ultimate winner. Don’t be afraid of the change rather accept the challenge and get yourself out of the situation. At Chalaang our experts are always available to mentor you to get started with a successful business. Get in touch with us today!
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