5 strategies to help small businesses preserve cash flow during an economic downturn

This article is a part of our Surviving the economic downturn: tips for small businesses.

In the article, we share five strategies that you can use to preserve your cash flow.

1. Limit expenditure on new product and service development

What product or service is doing really well and has the capacity to continue making you money? This is what you need to focus on. This is not the time to be pumping money into a new product or service whose return on investment you are not certain of. Your focus should be on promoting products and services that you know will do well.

2. Be creative with your marketing budget

In another article, we noted that an economic downturn is not the time to cut back your marketing. However, it is a time to be creative with how you market so your marketing budget can take you further. Going digital with your marketing is one way of ensuring that you stay on top of your customers minds. Increase your presence by regularly checking in with your customers, follow up with potential customers, and create offers that are irresistible. But do not just market, also be genuinely interested in your customers. Every one is having a hard time and letting them know that you are standing by them might win you more loyal customers.

3. Plan your finances

Your profit margins are likely to reduce due to the economic downturn. It is therefore important to carefully plan your finances. Cut back on non-essential spending and where possible, source for cheaper inputs that do not compromise your quality, and where possible, negotiate for discounts.

4. Look for financial assistance

Research and apply for grants to help cushion your cash flow.  If grants are not available, look into cheap credit. When looking into loans be careful that you do not sign up for a product that you cannot afford. This is the time to consider soft loans from businesses and family.

5. Adjust to the new reality

This is the time to reflect deeply on your business process, identify what works and what does not. Identify strategies to realize efficiency. For instance, consider bringing in a service provider for non-core processes that your team is struggling with. Reserve your team’s time for tasks that deliver the highest returns on investment.

Share with us your experiences. What has worked for you?

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