In contrast to the media coverage of businesses that are struggling, the most notable having been Woolworths, there have been numerous articles about companies defying the credit crunch doom and gloom, not only going strong in the current economic climate but actually thriving. Firms in the business of cheap fast food or basic take-away meals have experienced a boom during the economic downturn as cash-stricken consumers spurn gourmet lunches and expensive dining – Domino’s Pizza and bakery retailer Greggs being clear examples. Another sector that is also faring well in the recession, according to reports, is the home entertainment industry as consumers choose to save money and stay indoors.
As mentioned in our previous post, a quarter of small businesses fear that their company will go under if the economy doesn’t turn around in the next year. However this may affect some sectors more than others. In a recent survey of Intuit customers, over a third (35%) of those businesses in the computer and IT services sector said the economic slowdown would have little impact on their business while 30% even went on to say that they thought their businesses would thrive despite the weakening economy. A quarter of healthcare providers surveyed also believed their sector was recession-proof with 15% going on to say they will prosper in the current environment. In stark contrast, 0% of manufacturers thought the change in economy would have little impact on them or that they would flourish during the recession, which is currently being reflected in how the automotive industry is doing at the moment.
So what makes a business recession-proof? Well, being in a particular industry can help as being demonstrated at present. However, regardless of which sector a company operates within, having an effective cash management approach can help any business succeed during a downturn let alone survive. This involves knowing what money is coming in and out, and making sure financial records are robust and up to date. This can be easily achieved by using some simple financial management software. Maintaining a healthy cash flow is a proven strategy no matter how benign or malignant the economy is and by following this approach any business can succeed through the good times and the bad.
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