How an Accounting Service Can Help in an Economic Downturn

The stock market has been on a wild ride as investors are responding to the global impact from the Coronavirus pandemic. The long-term effects of this economic downturn are still unknown, but most people agree that the global economy is going to be rocky for a while. Businesses are closed and social distancing is affecting spending habits, taking a toll on the normally robust spending that is usually happening in our capitalist society.

If you look at the trends through history, it is normal and expected for an economic downturn to happen at times, with other periods of growth and prosperity. It’s been said that “necessity is the mother of invention,” which is a good reminder that these economic difficulties offer an opportunity for businesses who can adapt to the changing needs of the consumers.

Economic Downturn: Businesses Thriving and Tanking

How is this current economic downturn impacting your business? There seems to be stark differences in the way some companies are thriving while others are struggling. For example, the travel industry has taken a massive hit, which means that your business is likely struggling if you provide travel products or services.

Public events and gatherings have also been affected, including event centers, concerts, movie theaters, expos, sports, and anything else that draws large crowds of people. It’s difficult to calculate the total loss in the entertainment industry and how these cancellations will have a long-term effect on the economy.

On the other hand, online retailers have seen a boom in business as people are turning to online resources for groceries and household items. There is still a need to buy food and personal supplies, and the online suppliers that have stocked the shelves are ready and willing to ship anything that you need.

Other surprising growths have been occurring, such as an increase in stocks for companies that provide Personal Protective Equipment, such as face masks. Toilet paper has been sold out as many people have been “panic buying” anything on the shelves. Even jigsaw puzzle manufacturers have been struggling to keep the shelves stocked because families are looking for activities to do at home.

Supporting Your Business in an Economic Downturn

Whether you are experiencing the pinch of slower sales, or your doors are closed right now, it is important that you are strategic in handling your finances and preparing for the future. Even if you are in a busy industry, this economic downturn is a reminder that it’s important to have your business affairs in order – you never know when the tides will turn and your business might be negatively affected.

If you are smart with your strategy and you work with the right advisors and professionals, you can leverage your company for growth in a recession. But you need to be ahead of the curve – looking for the things that consumers might want to but in the future. Additionally, calculated decisions need to be made regarding product manufacturing, development, inventory, and more.

Tips for Positioning Your Business for Growth in a Recession

What is your plan to help your business thrive in an economic downturn? Here are a few tips to help during this challenging environment:

  1. Focus on Your Strengths: Churning out the same-old products and services won’t cut it when things are changing. Look for ways that you can improve your core competencies so that you can gain an edge over your competitors. As you specialize and optimize your business offerings, it is easier to sustain your business in the long-term, regardless of what happens in the economy.
  2. Look for Opportunities: Stay dialed into spending patterns and customer demand to identify areas where you can tap into market growth. If you have financial strength in your business and the ability to move quickly, then you might be able to act fast when growth potential is available. This agility gives you an advantage when your competitors are stuck in old sale systems and outdated marketing campaigns.
  3. Systems Improvements: Next, it is important to find areas of improvement within your internal systems. Are there areas where you are wasting time or money? How can you adjust your current processes to improve output without spending more money? Take time to evaluate key drivers to look for areas where you need to be focusing on business growth. Take a team approach with managers and staff members to find how you can do things cheaper, faster, or better.
  4. Consider Profit Margins: Selling more product isn’t worth your time if your profit margins aren’t adding up. Even small improvements in profit margins can have a significant impact on your long-term business growth. For example, is there a way for you to save a bit of money on every product unit? Or, can you find ways to upsell customers to increase the overall amount of each transaction? Get creative to find ways that you can cut costs and increase profits, without sacrificing the overall quality of the product or service that is offered.
  5. Save for a Rainy Day: Cash in an emergency savings account can bring peace in the unknown. While it’s important to reinvest cash back into your business, you also need to be sure that you have enough cash flow to keep the company running when things get lean. Cash flow can be managed by adjusting inventory, managing credit terms, and creating a financial system with a built-in savings account. This emergency savings can be the difference between your business surviving or failing when unexpected events happen that impact your sales.
  6. Avoid Debt: It takes money to earn money, but you need to be careful about how much debt you take on as a business owner. If you are too leveraged in credit accounts and mortgages, it will be a challenge to keep up with debt payments when things slow down. You can rest easy knowing that the economic downturn doesn’t have to take your business down in difficult times. Instead, minimize the amount of debt that you are carrying to give you more control over cash flow at all times.
  7. Maintain a Vision: You need to know where your business is heading, and this message must be communicated with your employees. Encourage everyone to be innovative with ideas that could influence sales and overall systems. Additionally, share this vision with your customers and business relationships, giving them confidence that you will maintain strength despite the changes in the economy.

Accounting Services for Your Small Business

If you don’t already have a good accounting and bookkeeping system in place, then now is the time to get started with these systems. One of the benefits of working with an outsourced accounting team is that you can tap into these resources without the need to meet face-to-face.

When an economic recession hits, many people are looking to cut costs – and you might be tempted to eliminate accounting services. But the truth is that accounting support is more important than ever during an economic downturn. When the business is under stress, you need a trained financial expert who can watch your expenses, manage available capital, and offer suggestions about how cash flow can be improved.

Additionally, accounting services are valuable for leveraging tax deductions as much as possible. As your profit margins change, your tax burdens will shift as well. It is essential that you are staying ahead of these changes and maximizing deductions and tax credits wherever possible. Most business owners don’t have the knowledge or experience to know where tax and accounting benefits can be improved. So, it is an investment to lean on the support from a trusted accounting team.

Refocus Your Efforts on Budgeting and Bookkeeping

It doesn’t matter if your business is in a growth phase or if you are struggling to keep your doors open during an economic downturn – right now is the perfect time to recommit to your financial systems. By refocusing on budgeting and bookkeeping, you can optimize profits, minimize expenses, and set your company up for success in every economic climate.

As business owners learn more about the benefits that come from professional accounting services, it is easy to see why it is worth the effort to hire an outsourced accounting team. We offer years of experience that can be rolled into your accounting strategy. Our knowledgable accountants have worked with small businesses in a variety of industries. We understand what it takes to improve overall results in every economic climate.

Compare the costs of in-house accounting with outsourced services, and you’ll see that it makes sense to leverage the available services from a trusted team. At Easier Accounting, we are committed to your business success and satisfaction. We offer a personalized approach for every business owner, giving you top-notch services at affordable prices.

Whether you need tax strategy or full-service accounting and bookkeeping, we are here to help. Learn more about these available services by talking to us at Easier Accounting. You can reach us at (888) 620-0770.

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