The ability of a company to overcome crisis situations with minimal losses is one of the basic conditions for its survival. The mistake of many managers is that they do not perceive periods of sharp decline as regular and inevitable phenomena. Accordingly, they do not have prepared mechanisms to overcome economic crises. At the same time, a variety of factors affect the financial performance of a company in modern conditions, most of which cannot be predicted and prevented. But they necessarily appear, as history has shown even in recent years.
The mere understanding of such risks and preparedness with crises at the time of their onset makes the company more tenacious and competitive. Below are universal ways to save a business in a difficult economic situation.
Formation of a reserve fund
Capital in the form of cash is one of the most important resources that allow companies to stay afloat during periods of general economic collapse. It does not matter the quality of accounting and data on income / expenses. The dynamics of profit as such speaks of the development prospects and current successes of the enterprise, but during the crisis these indicators will recede into the background. The reserve fund with real savings will act first of all as an airbag. In this regard, it will not be amiss to answer the following questions:
- How accessible is reserve capital?
- What is its real value?
- What can be done to increase it?
- Is it possible to quickly transfer non-cash funds to cash?
Since the creation of a reserve fund, especially for a small company, is a significant burden and a brake on further development, it is important to carefully calculate its optimal amount without exceeding it.
Contract insurance
Business largely depends on transactions with partners. These may be suppliers of raw materials, buyers of manufactured products, legal and technical service companies from outside. Of course, the viability of the business will also depend on these contracts. Therefore, it is important to assess whether the company will be able to overcome the crisis in the conditions when partners go bankrupt or fail to fulfill their obligations in sufficient quantities. For this, transactions should be periodically monitored with the possibility of concluding alternative contracts.
Team significance
It is also important not to forget that the leader is not the only participant in the life of the company. The strength of any business lies in his team, through whose efforts he develops and achieves success. This principle does not change during the economic crisis. All members of the team will depend on whether the company can survive this difficult period.
Even before the crisis, it is important to hold special meetings on possible scenarios for overcoming the situation with minimal losses. What is important is a broad view of possible problems from different angles, which will allow coordinating the actions of different groups within the company.
Conclusion
Even following the above recommendations does not mean that the company will certainly overcome the crisis, while its competitors will disappear from the market. But these are basic strategic techniques that, in principle, will give the company a chance to survive in a difficult economic environment. The use of these mechanisms in practice makes the business more stable and stable in the conditions of the financial crisis, which in itself indicates the maturity of the manager.And even if at the right time these techniques do not give the expected result, it will be at least a valuable experience with lessons for the future.