Kavan Choksi Sheds Light on How to Help a Business Survive a Recession

Kavan Choksi Sheds Light on How to Help a Business Survive a Recession

Many parts of the world are in turmoil over recessionary concerns at the moment. These concerns stem from the negative impact on demand growth because of monetary tightening, continued supply chain disruptions, soaring energy prices, and more. A recession is ideally defined as two consecutive quarters of negative growth in economic parlance. During the recession, many businesses may find themselves stretched beyond their means and hence struggle to survive. However, this is not always the case. Financial experts like Kavan Choksi mention that companies who properly prepare for recession in advance and have a contingency plan in place can effectively survive and even thrive during a recession.

Kavan Choksi talks about preparing a business for a recession

In certain ways, the key to navigating a recession in a successful manner lies in opting for a ‘contingency mode’, rather than a ‘survival mode.’ Hence, to properly prepare for recession, companies need to focus their energy on their core competencies, which implies to its most popular service or products. Businesses may even choose to scale back on weaker products and services, and instead work towards capitalizing on their core products by exploring multiple streams of revenue.  For example, if a company follows a service-based model, then it might experiment a bit with subscription offerings and provide additional tier models like a mobile-only tier or a VIP tier. In a similar manner, in case a company is concerned about its cash flow position during recession, they may choose to provide discounts on subscription plans in the situation of early renewals.

The best bet for a business to ride out a recession would be to invest in its existing customers. The focus of a business must be on creating and developing relationships with customers. The simplest yet among the most effective way of achieving this goal is to keep abreast of the ever changing customer requirements and adapt to them. This shall put a business in a better position to preserve its revenue streams in an effective manner. Doing so is immensely vital as acquiring new customers becomes complex during economic slowdowns.

To prevent their existing customers from losing interest in the company, one may try to run loyalty or customer incentive programs. They should broadly focus on offering good after-sales service and work based on the feedback received. The company must also put emphasis on diversifying its revenue streams in order to minimize potential damage from major customer loss during a recession.

Kavan Choksi points out that recession not only hamper the profit margins of a business, but also cash flow. Many suppliers and consumers of the company are likely facing cash issues during such times as well. Therefore, businesses need to try their best to protect and streamline the cash flows of their operations. Analyzing the bottom line and cutting back on any unnecessary spending would be one of the best ways to protect business cash flows. Subsequent to doing so, the savings can be used for the required business spending. The business cash flow levels will also depend on how it manages debt, as meeting interest payments can be difficult during slowdowns.

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