Is your business set up to thrive during the recession? You may be surprised that according to a recent survey by the Association of Corporate Growth, It found that less than thirty percent of CEOs and CFOs believe their companies are prepared for any kind of downturn. But it’s not too late to fix that — especially if you’re willing to take some risks.

Here’s how:

Review your cost of goods sold (COGS)

When your business is going through a recession, it's important to control costs. COGS refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labour directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs. The impact of a COGS increase or decrease can be felt across your business, from inventory control to cash flow management.

To manage these costs more effectively, consider these tips:

Substitute lower-cost materials where possible without losing any quality

Reduce Waste

Negotiate, Negotiate, Negotiate

Offer Quick Payment for Lower Prices

Buy Need, Not Potential

Invest in research and development (R&D) to validate customer needs and wants

If you're cutting back on marketing spending, it's even more important that you invest in R&D so that you can better understand what customers really want (and don't want). You'll also want to find out how much they're willing to pay for those products or services. This way, when times get better again, you'll already have some good ideas about how best to serve them.

Your company will become more competitive over time as new products are developed through R&D investments during the recession years when competitors aren't investing in new product development as much as they should be doing so. This gives you an advantage when things start picking up again because you'll already have better offerings on the market by then, Rather than if you had just gone with existing processes.

Avoid wasting money on invalidated products based on assumptions

A lot of companies spend millions of dollars each year on products and services that fail because they were developed based on assumptions instead of facts. You can avoid this problem by identifying key components of your customer base and understanding the data points that matter most to them.

Don't get caught up in trends just because everyone else seems obsessed with them. The internet makes it easier than ever before for people to share their opinions and ideas with each other, but that doesn't mean every trend is worth jumping on.

Renegotiate manufacturing terms

Contract manufacturers and other partners may offer favourable terms during difficult economic times. They may be willing to extend payment terms or offer discounts on their products or services if you agree to buy more or order sooner than usual. This could help reduce your costs or increase your sales during tough economic times by giving you access to important products at a lower cost.

Look for ways to reduce costs without sacrificing the quality of service provided

Many companies cut back during a recession by reducing employee hours, making fewer investments in operations improvements, postponing maintenance projects, etc, but this could be bad news for quality control. You need to make sure that quality across the business departments remains high even as you tighten your budgets; otherwise, it could damage your reputation, lead to customer complaints and ultimately impact sales negatively down the line when things get better again.

Leverage available grants

Whether you're looking to commercialise a new product or develop new markets for your existing line of goods, these types of grants can help you reach your goals without breaking the bank. There are many different grants available for startups and small-medium businesses that are easier than you may think to take advantage of. The money isn't free, but partnered with the right R&D consultant will allow you to maximise your return on investment.

If you struggle with any of these or want a more in-depth conversation, please reach out to me.

AJ Williams

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