Being Proactive With Collections in an Unpredictable Economy
The unpredictable economy can be quite unsettling and frustrating if you are a business owner, entrepreneur, or specialist. When the economy is unpredictable, it can fluctuate significantly and affect your profits or income in unexpected ways.
During any time of economic uncertainty, only the most competitive, organized, and resourceful businesses survive and even thrive. If you are a small or medium-sized business owner, entrepreneur, finance manager, accounts receivable professional, or another professional who wants to know how to mitigate the potential risks and maintain a healthy cash flow in an unpredictable economy, we can help.
At Prasse-Anderson Law, we provide clients with comprehensive business law services to help them avoid or minimize the risk and costly pitfalls as much as possible. Our business law attorney is based in Tampa, Florida, but provides legal counsel in the surrounding area, including Pinellas and Pasco.
Struggles Involved in an Unpredictable Economy
Businesses and workers may face a number of problems during times of economic uncertainty, including but not limited to:
Inflation. Inflation is the rate at which prices for services and goods increase across the economy. As a response to rising inflation, many consumers are forced to tighten their purse strings because they can afford less overall. As a consequence of inflation, a business may lose some of its customers and other customers may buy less.
Layoffs. A decrease in hiring and an increase in layoffs are some of the most notable indicators of a looming recession and are quite prevalent in an unpredictable economy. An indirect consequence of layoffs is lower consumer spending because people tend to spend less when they lose their jobs.
Added expenses. A business may face added expenses and costs in order to keep its operations running despite economic struggles.
However, just because any—or all—of the above-mentioned problems exist does not necessarily mean that businesses are doomed to fail. With adaptability, careful planning, and a proactive approach, businesses can navigate times of economic uncertainty and may even be able to thrive. Working with a business law attorney can help you understand your options during this time.
How to Thrive in an Unpredictable Economy
When the economy feels unpredictable or unstable, there are a number of things you can do to protect your business from turbulent times.
1. Be Proactive
You have probably heard the saying, “To be forewarned is to be forearmed.” This principle can also apply to businesses facing economic challenges. If the economy begins to experience its ups and downs, the best thing a business can do is to adopt a proactive approach and be ready to adapt. While it may be impossible to predict everything, being ready for changes is important to minimize the risk of being caught off-guard when the tough times come.
2. Build a Solid Financial Foundation
Just as you wouldn’t build your home without a proper foundation, you wouldn’t want to enter times of economic uncertainty without developing a strong financial foundation first. Even if your business has been around for years, it does not necessarily mean that you have a solid financial foundation. Financial resilience can be achieved through managing your cash flow and being wise about your expenses.
3. Maintain a Healthy Cash Flow
“Cash flow.” These two words mean a lot for the future of your business, especially if your goal is to thrive in an unpredictable economy. If you can learn to maintain a healthy cash flow even in turbulent economic times, you will be able to handle any unexpected expenses and money losses while also fulfilling your financial commitments.
4. Reevaluate Your Operating Costs and Expenses
Suggesting to reduce your expenses would be common sense. However, a better approach would be to reevaluate your operating costs and expenses and be smart about reducing or managing those expenses. Being smart about cutting your costs may mean renegotiating contracts, reducing non-essential spending, and preventing overspending, depending on your business and your circumstances. However, whatever you do, do not sacrifice your customers’ needs, as this could hurt your business in the long run.
5. Secure Financing Before You Need It
Maintaining a good relationship with lenders is a critical step when trying to protect your business in times of economic downturn. By securing financing before you need it, you open the door to any future advantageous opportunities for your business.
6. Communicate and Collaborate with Customers
Your customers are what matters most. In an unpredictable economy, it is more important than ever to focus on your customers. This means adopting a more personalized approach toward your customers to gain their trust and make their experience with your business pleasant. When working with your existing clients, you may need to consider taking advantage of flexible payment options, using early reminders and notifications, and offering customer assistance programs. When working with new clients, consider encouraging upfront payments, diversifying the customer base, and reviewing (or adopting) credit policies. These techniques can help you build trust, retain your existing customers, and attract new, loyal customers.
Helping You Create a Stable Financial Future
Keeping your business afloat during times of economic uncertainty may feel like a daunting task. If you are not sure where to begin, consider contacting Prasse-Anderson Law. Our business law attorney can help you take proactive steps to protect your business and assist you with creating a stable financial future during unpredictable times. Contact our office to book an appointment and get started.