What you think when you hear “economic cycles” and “market changes” often indicates how well-poised you or your business are to succeed during seasons of economic uncertainty. Like many business owners, suppose you fear economic uncertainty or market fluctuations. In that case, it can be easy to miss how market changes and economic uncertainty are opportunities for significant, long-term business growth.
Transforming change and uncertainty into opportunity and revenue can be done with strategic planning. That is why the team at United Consumer Financial Services has put together a list of best practices to help you plan for economic cycles and marketing changes:
Diversify Your Investment Portfolio
In times of economic uncertainty, traditional investments like stocks, bonds, and mutual funds are subject to the market’s volatility, meaning they may depreciate during an economic downturn. Suppose you only put money into these traditional investment types. In that case, an economic downturn may significantly reduce your cash flow and jeopardize the financial stability of your business — even after the economy recovers.
That is why diversifying your portfolio with non-traditional investments is a strategic way to safeguard against significant loss during times of economic downturn. Non-traditional investment types — like real estate, private equities, commodities, and hedge funds — can gain value during economic uncertainty, generating higher returns and opportunities for quicker recovery after a downturn. As you plan for economic cycles and market changes, talk with your financial advisors about how your business can start investing in non-traditional investment types less susceptible to depreciation.
Increase Cash Reserves and Prioritize Cash Flow Management
Cash reserves and positive cash flow are signs of financial health for your business, but they are critical when planning for economic cycles and market changes. Maintaining cash reserves and positive cash flow not only strengthens a company’s balance sheet but also secures a company’s purchasing power, providing financial stability even during a downturn. As you plan for economic uncertainty, these simple practices will help you increase your reserves and improve cash flow:
Regularly Evaluate Operational Costs and Strategically Cut Non-Essential Expenses
Freeing up cash flow can be as easy as identifying expenditures that contribute little to the business’s success or your employees’ productivity. For instance, subscription and office supply costs can often be significantly reduced by finding free alternatives or converting your offices to paperless workspaces. The goal is to cut costs without jeopardizing efficiency, production, or morale.
Increase Your Debt Payments
Even when interest rates on your business’s debt are relatively low, debt significantly restrains cash flow. Your debt will tie up your limited cash reserves during an economic downturn. During an upturn, it will slow your business’s ability to rebound and invest aggressively as the economy grows. Eliminating or refinancing debt offers an immediate boost to your cash flow.
Maintain Open Communication with Your Bank
Many banks are sympathetic to your business’s challenges and can help you identify tax credits and low-interest loan options that can increase your cash flow. Meet regularly with an advisor to discuss your credit line, payment deferral options, and extensions for the terms of your loans. Communicating with your bank ensures you know what options are available to you at any moment and fosters an ongoing relationship that will pay dividends in times of economic uncertainty.
Cash reserves and positive cash flow enable companies to weather the economic downturn and strategically invest for long-term profit when the economy rebounds. Beginning these practices is essential to set your business up for success long before facing financial uncertainty.
Maintain Your Marketing During the Downturn
In every stage of the economic cycle, companies need to continue generating leads and attracting customers to ensure growth. During months of high-profit margins, the value of marketing and advertising is evident in your business’s quarterly reports. However, during economic downturns, marketing and communications departments are often the first to downsize or experience budget cuts. To meet operational costs when revenue is down, businesses sometimes cut the mechanism to ensure their recovery and help them avoid significant setbacks. During an economic decline, marketing in a downturn may increase your market share as competitors cut their marketing costs.
Sometimes cuts need to be made, but defaulting to marketing cuts is shortsighted at best. Marketing today creates an opportunity for tomorrow. The leads your business generates in a downturn may be the ones that enable your business to rebound when the economy recovers. This commitment to marketing requires you to keep the big picture in mind and look to the future, investing in markets and potential customers who may not produce a sizable return on your investment for some time. Downturns and recessions always reach an end, and when the economy improves, your marketing investment will pay dividends for years to come.
Provide Consumer Financing to Boost Revenue
Even when your business is experiencing market changes, one constant you can count on is that customers want products and services when they need them at prices they can afford. You provide consumer financing if you want a competitive advantage in your market. Through firms like United Consumer Financial Services, consumer financing saves customers high upfront costs, enables them to get their desired products or services immediately, and allows them to make affordable monthly payments, perhaps 24 or 36 months. The business is paid within 1-3 business days of the contract signing for the financed amount, less a small fee. Consumer financing is ideal for customers and profitable for businesses, increasing sales and stabilizing revenue.
This is the kind of planning that benefits everyone. Consumer financing restores purchasing power to customers, allowing them to make affordable purchases even when inflation is high or the economy is at a record low. More customers can purchase your products or services immediately at your company’s list price with low monthly payment options, generating repeat customers and high customer loyalty. Contact the United Consumer Financial Services team to learn how your business can start consumer financing today.
Economic uncertainty does not need to slow the growth of your business. With careful planning, your business can prepare for market changes and leverage strategic investments, cash flow, marketing, and financing to maximize sales and boost revenue during a downturn.
With United Consumer Financial Services, you are not alone as you face economic uncertainty. United Consumer Financial Services is home to an experienced team you can trust who can help you prepare for the future of your business. Contact UCFS today to learn more.