Recession is the time when a country's economy slows down and the Gross Domestic Product (GDP) starts falling. A double-dip recession is said to occur when the economy goes through another recession, as soon as it recovers from the previous one. The negative growth in the GDP of the country is responsible for triggering a double-dip recession. How do we know if we are facing this problem? Few signs include rising inflation; resulting in high food and fuel prices, high unemployment and financial crisis. These things have a negative impact on businesses which suffer substantial financial losses, and on individuals who go through a rough phase during recession. Planning well on certain aspects can help business firms in beating the recession, which can otherwise be quite troublesome.
Surviving a Double-dip Recession
Cut Down on Expenses
A business involves several expenses, and recession is the time when a firm must revise its expenses. Cutting down on unnecessary expenses like high traveling costs, luxurious hotel stays, and buying new hardware when older ones can be used, can save a lot of money. During a double-dip recession, the firm's management along with the human resource and finance team can together identify such expenses and take steps to reduce them.
Retain Good Human Resources
Good people make good organizations. During a double-dip recession, most of the firms decide to cut down on human resources. While doing so, it is very important to retain the best people in the firm and layoff the ones who have failed to contribute to the organization. Layoffs may increase stress in the retained lot, as the fear of being handed the pink slip at any time will always be there. To reduce stress and increase their efficiency, the management must take them in the loop and tell them how the company is fighting to overcome the negative effects of recession.
Companies spend a lot of money on maintaining a certain level of inventory in normal times. However, double-dip recession is the time to cut down such inventory-related expenses. Storing excess supplies will not only block finances, but can also result in losses, if the firm fails to generate sufficient business due to economic slowdown. Firms can make use of inventory management software that can help in quick identification of expenses that need to be cut down. This will make the job easy, and save a lot of time and effort.
Go for a Joint Venture
Joint ventures or partnerships work well during recession as they provide scope for sharing and stretching the budget amongst both the firms. Huge expenses can be shared by the partners, thereby, bringing down individual costs. For instance, a fitness training business can collaborate with the one dealing with fitness equipment, and share their marketing expenses as their target customers are related to each other. A joint venture can be a good option to fight against recession.
Adopt a New Marketing Strategy
A good marketing strategy is essential for attracting customers. Firms need to update their marketing strategies from time-to-time to meet the current market trends. Recession is the time when customers look for value for their money and spend cautiously. To grab the attention of customers in tough times, it is necessary that businesses adopt new strategies for marketing their product, which are easy to understand, and convey the right message to the customers. Showing customers that you care for them and believe in providing value for their money, will surely help you retain them and acquire new ones.
Plan for the Future
Firms must realize that double-dip recession is a phase, which will eventually come to an end. Along with fighting recession by taking up new strategies, companies must also start planning for the future. Leaders who are able to visualize an after-recession scenario are capable of recovering the lost position in the market. Many firms fail to analyze this and eventually lose their market positions.
Be Open to Suggestions
In tough times, it is always better to listen to what others have to say. The management of business firms can ask for suggestions from their employees on ways to deal with recession, who may have extremely good ideas for the same. By doing so, employees will work along with the management as a team and come up with ideas to overcome the financial crisis.
Many firms fail to hold up in the event of economic slowdown as they miss out on the points mentioned above. Following these tips will help a business firm stay afloat during a double-dip recession and emerge as a survivor.