What is an economic crisis?
The economic crisis basically consists of the generalized reduction of economic activities, during a continuous period of at least six (6) months, whose causes may be internal or external - to the company and / or the country -, negatively affecting companies, which is reflected among other aspects in:
- Continuous and significant reduction in sales. Decrease in relative terms of profits. Difficulty creating new customers. Increase in finished product inventories. The company's liabilities increase, as a proportion of its assets and income. Decrease in the income of the company. cash flow Disproportionate increase in administrative and fixed costs with respect to operating income Repeated failure to pay creditors, suppliers, employees
How to reduce expenses?
- In general, try to reduce your fixed costs proportionally with respect to the total. You can reduce your facilities.; surveillance, maintenance costs, administration costs…. Rationalize the consumption of public services: landline, cell phone, electricity, water…. Eliminate… eliminate… what is not necessary. Eg Install savers. Your administration expenses should not exceed 5% of your operating income. Reduce “luxury” consumption Evaluate the impact and profitability of the so-called “representation expenses”. Reuse raw materials. Can you generate sub-products within your processes ? If not, you should set standards in the use of resources(raw materials, labor, spaces, general expenses). Improve - efficiency and effectiveness - in the processes of production, administration, sales, administrative, accounting / financial services. Revalue each job, especially those that do not generate added value; contract those non-missionary activities.
- Eliminate unnecessary activities Merge departments / positions. Concentrate functions and / or activities. Analyze workloads. Outsource the areas that are susceptible: Financial,? personnel / payroll administration ?, systems ?; General services? Maintenance? Transport?
How to generate income?
- The easy one: You have already implemented promotions of your products / services !!! What else can your products or services be used for? Have you thought about alternative uses ? How can you increase consumption? Review your sales plans; Redouble the effectiveness of your sales force. Make all your employees, partners, related, customers sellers. Visit or communicate personally to clients, find out about their situation; generate synergies with them. Take advantage of electronic media –internet, public or private information centers, public databases, email, fax- to do “ market intelligence” Sometimes you are in the “wrong place”. Use today's free electronic advertising media to promote your products: ex. Free social networks, blogs, hosting… Analyze the possibility of selling to the public sector. Eg www.contratos.gov.co Is there the possibility of opening markets or increasing your sales abroad ? Attend free events such as fairs, business conferences, business shows Sell, auction off useless or obsolete goods: Eg furniture, household goods, machinery, raw material waste, imperfect Check the reason or reasons why you are losing customers. What can you do? You know why you have " no customers”, That is why other consumers do not buy your products or services. What is your blue ocean? .Explore / Develop alternative productive activities but within the sphere of your business.
- Eg. Use alternate and / or rental of machinery or equipo.Tercerización and / or maquila for other companies
What not to do
- Dismiss the staff that generates added value. Decrease the quality of the good or service Eliminate all activities and / or means of publicity Complain and hope that things will improve by themselves Isolate, or separate from social activities of a business nature Close / give up / let yourself be depressed No ask for advice or help when you need it.
