By Jargalan Batsaikhan
Class 5Y
Due to the recent economic depression, many businesses and individuals have been forced out of job. Here are some tips for pulling through recession.
Tip 1: The most important thing to remember during recession is keeping the cash flow constant. When businesses get hit, the owners have to bring the production costs down and in order to do that without laying off more workers, the owners will try to delay payments or renegotiate payment terms. When that happens, your company’s cash supply recedes and without money, you cannot conduct business. This would not be too much of a problem during recession-free time but because of the recession, banks will not lend any significant amounts of money. An example of this method would be my family’s alcohol making company. Large chain stores try to delay the payments or even return the already purchased products and this affects the cash flow of the producer, which in turn affects the producer’s income.
Tip 2: The second piece of advice is to continue marketing your products because during recession, consumers tend to gravitate toward cheaper and usually lower quality products. It is very easy to reduce the budget for marketing and allocate the resources to other areas; however, making people remember your products as superior in quality is important because in that case you will lose less consumers as opposed to not marketing at all. Another thing to keep in mind is that there is an end to recession and if people forget your products then after the recession you will be in trouble. For example, if you are the head of a company that makes alcoholic beverages, you can sponsor or even organize events such as beach party or even ice bar that are attractive to young people between 20 to 30. If someone else were organizing such projects, your company would do well to sponsor by, for instance, providing them with free or subsidized drinks. This can increase interest in your brand, which typically leads to higher revenue.
That was a good reminder about keeping the brand alive in the eyes of customers, even in a recession. You can bring in elasticity here as well, when income falls, what happens to fall in quantity demanded? So what are some methods one can do to ensure that cash flow constant, especially when your purchasers just cannot pay?
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