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Top 5 Ways To Stimulate Cash Flow During Recession

As the economic downturn continues due to COVID-19, businesses have focused their attention on urgent matters such as the safety of customers and employees, maintaining supply chain, etc. To stay afloat during the economic crisis, companies have to stimulate cash flow by managing revenue and expenses.

History is evident that companies that successfully maintain their cash flows during a downturn with radical strategies can navigate with ease during the crisis. These strategies include being generous towards your customers, but aggressive while dealing with expenses and revenues. The question is how to achieve this balance.

Ways to Stimulate Cash flow during a Recession

A decline in sales is a big threat to small businesses as they are particularly vulnerable because they don’t have large reserves and savings to help them weather the downturn. The following are some of the ways companies can stimulate and ensure steady cash flow to stay afloat during economic downturns.

1.      Securing Sales with return policies and warranties

Companies need to secure revenue by securing sales and customers who are currently navigating the market with uncertainty. As the global pandemic continues and threatens the economy with chances of a second wave, now is the time to take risks by offering generous return policies and warrantees to customers to successfully close sales.

In the 2008 financial recession, Hyundai used this strategy by introducing a “Hyundai Assurance return program” The program allowed their customers to return the car if they lost their jobs during the recession. With this strategy, the company made profits during the chaos in the global economy and increased its sales when others were selling less. In the first quarter of 2008, Hyundai’s global market share rose to 4.7%, as compared to 4% last year. You can also consult a financial expert regarding your revenue strategies.

2.      Innovation

When things are going down, get ready to take customers by surprise by launching innovations and new products. Most businesses are risk-averse when it comes to innovations, but keep in mind that your customers will pay for an improved service/product.

Your innovation does not seem to be perfect, think of the first release as beta testing where customers will help you identify problems and glitches with the product. For example, Tesla is doing the exact same with its autopilot software. The software is not finalized, but they realize that the best way to improve it is to gather real data from customers.

Companies like ESPN are taking leverage of the current pandemic and launching projects sooner than expected to cater to consumers that are hungry for entertainment and distraction.


3.      Introduce new Sales and revenue models

Recessions are a great time to test new pricing and sales models to attract customers with meaningful discounts. However, it may need new pricing strategies like offering gift cards, subscription-based deals, as opposed to conventional models.

One example of companies using such a strategy is that of Blaze Pizza, one of the largest pizza place. Blaze Pizza recently launched a campaign on social media called #BlazingItForward. Under the campaign, a person who purchased their $20 gift card would get a free pizza with their next purchase. After just a few weeks, the company saw an increase in gift card sales beyond expectations.

Gift cards can be difficult to maintain from an accounting perspective, but you can always consult the best accounting firms in Dubai for assistance. Although it may seem retail-specific, companies should try gift card tactic to increase revenue.  

4.      Manage Marketing Costs

One of the biggest mistakes small businesses make is when they start cutting their marketing budget or eliminating it altogether during a recession. But this is exactly what your business needs right now. Consumers are restless, working from home, and quarantined. They are always online looking for new products, so it’s your job to help them make a decision.

Don’t quit marketing altogether! However, some marketing doesn’t pay back and should be cut immediately during a recession. Measure marketing costs and see if they are motivating consumers or distributors. For example, in 2009, Anheuser-Busch cut multiple sponsorships (e.g., Manchester United Football Club) because they realized it was motivating distributors with no effect on customer awareness.

5.      Acquire new customers

Finally, during these challenging times, companies should seek out new potential customers. One of the ways to do that is to strategically sample your customers, especially if your company deals with an intellectual property like digital services, software, etc., with relatively lower marginal cost.

For example, as COVID-19 has taken schooling to online platforms, Zoom has started offering free services to Kindergarten to Level 12 education. This type of investment not only increases brand loyalty in the long run but also generates a constant stream of cash flow down the line.

Another great example is of The New York Times, acquiring an audio app called Audm, that offers audiobooks and read-aloud newspapers. This is a great strategy to get new customers as the world is shifting from print to podcasts.

Protect Cash Flow During Downturn

Cash flow is the blood of your business. Nothing can make your business 100% downturn-proof, but implementing these strategies can ensure that your company not only survives but also thrives and makes a profit during these economically challenging times.

Resist the temptation to stay behind defenses and take measured risks to stand out from your competitors.

Gaurav Gupta
Gaurav Gupta is an SEO expert,writer and blogger with a strong passion for writing. He shares views and opinions on a range of topics such as Business, Health/Fitness, Lifestyle, Parenting and lot more. For More Information Visit Here : The Prime Review
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