There are many challenges for those who decide to give up their status as employees to start a business. Bureaucracy, taxes, interest, social security contributions and labor sum up just a few of the daily concerns of the entrepreneur. In this problematic context, we still have to deal with that economic cycles and with the oscillating behavior of the market. So it’s no coincidence that so many companies go bankrupt before their first year of life and only a minority of that percentage survive to their fifth year of existence. Faced with these difficulties, we have put together some tips to help you adapt your project and overcome the inevitable market crises.
Economic difficulties favor innovation
An intelligent businessman knows how to use business cycles to his advantage. This is what the Small Business & Big Business Guide defends – How to Keep Your Business Alive. “Unfavorable economic scenarios solve the search for plausible solutions Alreadystimulate creativity of the good entrepreneur. Therefore, in what appears to be an unfavorable economic hotbed for business expansion, the market is the most receptive to new ideas,” the editor’s guide states. Therefore, in a difficult economic situation, you need to use your strategic creativity and take the risk of finding other solutions. Complex and difficult to execute, this mission requires good timing. It can make sense to talk to more experienced entrepreneurs, for example to take part in workshops and consult consultants.
How do business cycles work?
It’s difficult to explain economic cycles in a simple way without going at the surface. However, to be successful in business you do not need to be an expert in the macroeconomic scenario, but you do need to be an expert in the segment you are in. Hence one global vision it tends to be sufficient, especially for micro and small entrepreneurs: Business cycles are characterized by an oscillating and periodic movement of a large number of economic factors. However, this oscillation is generally measured by the change in gross domestic product (GDP) over time. The scenario is usually divided into four phases:
- boom (breakthrough growth).
- Recession (stagnation, no growth).
- Depression (contraction of the economy).
- Recovery (economy is growing again).
- Survive the cycles of the economy.
We’ve put together some simple tips to gradually adapt your business to a solid base and be prepared to face the inevitable problems that arise:
- Be rational and put aside unfounded optimism when making strategic decisions.
- Constantly analyze the market with the help of specialized professionals.
- Maintains strict inventory control.
- Innovate products and processes and always adapt to the times.
- Constantly monitor the competition to understand where your opponents are moving.
- Computerize the administration of your company.
- Regularly holds training programs.
- Attention to tenders. They can act as a guarantee in times of crisis.
- Look for alliances with large companies.
Another piece of advice for those difficult moments is strive for employee participation. “Treat the work environment as if they are crossing the same rough sea and try to instill confidence in them. In times of crisis, the employer must lead the team, i.e. offer himself to the employees and look for integration strategies and mechanisms with them that help to overcome problems,” the Globo editorial guide suggests.