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Avoiding Bankruptcy: Ways to recession-proof your business

The current global economic climate, coupled with the coronavirus pandemic, is causing havoc on the world’s stock markets. In essence, investors are nervous because of the unknowns around the rapidly advancing coronavirus infections. Therefore, as with all worldwide, regional, and national crises, investors are selling off stocks and investing in safe-haven assets like gold.

The Effects of the Coronavirus pandemic on the global economy

Ben Winck, in his article titled, “S&P 500 posts worst week since the financial crisis as coronavirus fears flare,” notes that every major US stock index plunged to new lows on February 28, 2020. And the “S&P 500 sank as much as 4.1%, while the Dow Jones Industrial Average tanked as many as 1,000 points for the third day” during the week of Feb 28, 2020

The article published on the New York Times’ website, titled “Will the Coronavirus Cause a Recession?” states that the US Fed reduced interest rates by half a percentage point as an attempt to prevent the effects of the coronavirus pandemic from negatively affecting US businesses. As described above, “the global outbreak has caused upheaval in stock markets and disrupted supply chains around the world.”

Consequently, global central banks are doing their utmost, led by the USA, to prevent this pandemic from decimating the global economy.

Additional issues like supply chain challenges and decreasing retail and manufacturing stock levels as a result of breaks in the manufacturing of goods in Chinese factories as well as the break in the logistics chain because of the closure of Chinese airports and harbors are adding a level of economic uncertainty for global businesses, irrespective of the size of the company.

Ways to recession-proof your business

Thus, according to a bankruptcy lawyer in Toledo, it is safe to assume that, during the current harsh economic conditions, it is reasonable to expect that a more significant number of businesses will either be liquidated or go into business rescue programs.

Therefore, the question that must be asked and answered is: “How do you prevent your business from filing for bankruptcy in 2020?”

By way of answering this question, let’s consider the following quick tips:

Cut operating expenses

In times of economic difficulties, it is vital to improve organizational efficiencies. And, in doing so, you will reduce the cost of doing business and increase profitability levels.

Look for alternative supply chain routes

Prableen Bajpai, from Investopedia.com, correctly states that China is the manufacturing powerhouse of the world. China is the globe’s second-largest economy, and most of the world’s products are manufactured in China.

However, as seen during the coronavirus outbreak, global manufacturing and retail figures are down. This is as a result of the total shutdown of China to the outside world. Flights are suspended between Chinese airports and harbors are closed to container ships. Thus, it is vital to look for alternative supply chain routes.

Sharpen your company’s marketing methods and models

Digital marketing has provided the platform for all companies, irrespective of size, to compete equally in the online space. The overall cost is also much less than traditional marketing spends. However, it’s essential to look at your company’s marketing strategies to ensure that you are reaching your target audience and increasing the ROI on your company’s marketing budget.

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