Frugality Guru

The impact of recession can be very damaging not only to households but to businesses as well. Learn about these effects of recession and prevent your business from succumbing into its deadly claws.

1. Customer scarcity

When you have too few customers, consequently, your income suffers as well. The rising prices make customers too picky or less interested in giving you business. Existing customers may also be re-assessing their spending, which results in fewer orders for you. So what do you do? How about changing your customer acquisition techniques? Have you tried online marketing? This may not be suitable to all businesses but there’s no harm in considering it. Online marketing has many forms and doing your assignment will prove to be helpful in determining which technique will benefit most your business. I am myself at presant looking into ways in which this form of marketing can help in my own business life

2. Ridiculously high credit card debt

Inflation is likely to happen during inflation, which means your expenses can be higher than normal. If you have been relying on your credit card for payments, you now need to monitor your spending really closely. This is because losing track of your expenses can surprise you one day when you no longer have enough funds to pay off all your debt. You do not want to have problem with your credit card because a bad rating will not be of great help when you are trying to obtain approval for loans.

3. Increase in cost of utilities

The rising price of food, electricity and gas can put a big dent to your business. This can be especially true if you run your business form a physical location. Increase in monthly bills means lower income. So how do you resolve this? There are so many ways to save money on utilities. One is to cut back on non-essentials. It the weather does not need for a full blast AC unit turned on, turn it off. If you can turn off the lights more often without making the business operations suffer, then do so. If you can use less expensive packaging methods or materials, please do take advantage of cheaper alternatives. Re-assess all the nooks of your business. Take a harder look to your books to get deductions. Lessen expenses in every way possible. Make the most out of technology. If you can automate parts of your business, do so. You can also hire contract workers such as virtual assistants to help you be more productive and to allow time for you to brainstorm on how to improve your business.

4. Funds gone kapoot

If you started your business using a loan, you might find yourself out of savings to fall back on if you need funds to survive the recession. To control this, have a suitable savings plan, wherein you can put in some of your income. This allows you to have a backup plan whenever the current downturn happens.

5. Low staff morale.

Slow periods mean sadder employees. Why not add incentives and create contests to boost the morale of your sales team? This is the best time to get your creative juices flowing to help motivate your employees. Having motivated employees means increased sales. So, don’t be too stingy with incentives and praises.

Have you felt any of these yet? If so, what are you waiting for? Try out the suggestions on how to control the effects of recession.

( 0 )

March 17th, 2009

When there is a drought, most farmers pray for rain. Will that make rain pour from the heavens? No and the same thing will happen when you are stuck in a rut during a recession. You just have to wither out the storm because this is the only way you business will stay afloat.

No matter if your business is small or large, marketing is the best way to get your message across to the people. During a recession, you have to make cuts in the budget and instead of spending more on advertising, it is best to use this money in retraining your staff because customer service is key when you want to set yourself apart from the competition.

Cuts should also be done in terms of how much you get from the business and if you are the owner, the best way to do that will be to lower the profit margins until such time that you can put them to normal levels.

By doing that you are able to satisfy the most important person you will ever meet in your business and that is the customer. Another solution will be to offer sales and discounts as this ensures their loyalty.

If you have to answer to shareholders, tell the situation even if they already have an idea how things are. You just have to reassure them that things will improve. After all, a recession is cyclical so they will soon get a return on their investment.

During a recession, a lot of businesses will retrench their workers and close down several offices. If you are a gambler, this is the best time to buy new equipment and try to take a larger share of the market. If you decide to do this, make sure you get a fixed rate so won’t have a problem paying for these goods.

You might think that most banks are not willing to lend people money but thanks to the bailout, you are able to do so. You just have to tell the bank what steps you are taking during the recession so they know what you are doing and understand that the steps you are taking are for the long term.

Should business be really tough and cutting expenses be not enough to help your business stay afloat, you should be prepared to let some people go. When you do this, make sure you are only dismissing employees who can easily be replaced when the crisis is almost over.

If you want to reach out other customers, create a website so you can offer your products or services to other towns, states or even countries.

When you get to have your own business, you are at helm. No one is going to tell you what to do and you are expected to be the one to set the direction. If you have doubts as to what you can do to survive a recession, don’t be afraid to ask other owners what steps they have taken. Sharing this information is beneficial to both because no one wants to throw in the towel.

A recession affects everyone and it does not matter if you are employed or you are running your own business. How badly things get depends entirely on your financial situation so you just have asses it first before taking any appropriate action.

( 0 )

March 12th, 2009

Ask an economist to define recession for you and chances are, they’ll tell you that it is a state of the economy where it declines for at least 6 months.  But that’s just a pretty, picture-book definition.  Recession can affect not just cities and countries, it can also affect individuals and families on a more personal level.  To help you implement tax and personal anti-recession steps, here are things you can do:

Start saving.  Now.

If you have a nest egg stashed somewhere, good for you.  Boost it with more savings.  If you don’t, it’s time to start immediately.  Implement tax and personal savings steps in order to fight the effects of recession.

Cut back on spending immediately.

If you think you need everything you buy, gather your last few weeks’ worth of receipts and rate each item according to necessity.  Chances are, there are a few things there that you’ll realize now that you didn’t really have to buy.

If you see the same pattern in most of your receipts, that’s a sign that you ought to cut back on your expenses and seriously implement a budget or spending plan.  You could, for example, cancel gym memberships and take up running or home exercises instead, buy items on sale instead of at regular prices and put off any large purchases – cars, TVs, video equipment, furniture, etc.

Take big chunks out of your debt.

Your debt can get you down and it will not hesitate to do the same thing to your credit score.  During a recession, a bad credit rating is just not something you want to have.  If you have debts in some form (loans, credit cards, mortgage, etc.), try to pay off as much of your debt as possible.  The earlier you do this, the better it will be for your finances.

Clearing your debts is an excellent anti-recession step because it helps save you money in terms of interest.  It will also give you peace of mind and the personal satisfaction of being in charge.

Consider investing?  Ask a professional.

An experienced financial adviser can help you understand the kind of options you have, given your own resources and the type of risks you are willing to take.  Recession can make investing much more of a challenge, particularly for the uninitiated.  That is why you’ll need all the help you can get in order to find the best places where to put your money in.

Know your deductibles.

Review your tax code for the types of items that you can include in your deductibles.  Remember that not all expenses can be used as deductions.  Only if you can prove them ‘ordinary and necessary’ will the tax man consider them.

Keep all receipts for deductions.

Audit or no audit, it pays to have documents that support your tax claims, especially if they refer to deductions.  Get organized regarding your files, particularly those that pertain to your business or work.  Keep things where you can readily access them and use for reference later.

Consider leasing your business vehicle.

If you want to give yourself better tax performance, a good anti-recession tip to follow is to lease that car of yours.  This will help get you better deductions compared to what you’ll receive if you purchased the vehicle.

When in doubt, always refer to a professional.

The personal anti-recession tips you obtain will usually work seamlessly but some steps involving taxes might have certain limitations.  Before implementing these steps, you might want to consult a basic taxation guide or see an accountant or bookkeeper.  They can guide you on what you can and should do based on your own unique circumstances.

( 0 )

March 9th, 2009

Recession can be a very stubborn thing.  Once it drops by, it can take a while for it to fade away and disappear.  However, that doesn’t mean that we should simply sit back and let it overcome us.  It can, after all, wreck havoc on our finances and personal lives.  In these tough times, finding a job already seems improbable – just imagine being in the market for jobs that are not affected by recession.  But take heart.  There’s still hope yet.  Here are top 6 tips for finding recession-proof jobs:

Look for jobs in secure industries.
If you’ve read the news by now, trying to get a job in an auto plant is like trying to get on an elevator that’s going down – and you’re trying to go up.  The same is true if you’re trying to get a leg in real estate.

Instead of wasting your time trying to join an industry that’s experiencing some bad times, try to set your sights on industries that have remained stable or are experiencing growths.  These include:

-    Health care (nursing, caregiving, special care, medicine, physical therapy and other support manpower)

-    Law enforcement

-    Information Technology (network administration, software design and development)

-    Support Services (customer service, administrative assistance)

-    Sales and business development (product management, retail and wholesale)

-    Engineering

-    Education (teaching, school administration and other related support services)

Boost your resume.

If an employer sees nothing promising or exciting in your resume, they won’t think twice about throwing your piece in the trash bin.  Before you try to hook a recession-proof job, consider revamping your resume right now.  Take a copy of your latest and review it.  If your resume is several months old, there’s a high likelihood that it needs a makeover.

Focus on accomplishments.

A common error among jobhunters is detailing their job descriptions in their resumes.  Although this is helpful in establishing their work experience, it may not always give the prospective employer a good idea of what you can do.  Emphasize on the results that you have produced instead.

Adapt your resume.

Typing out and printing a generic resume is a huge mistake.  Generic is average, which means that you have very little to help you stand out from the crowd.  If you want a recession-proof job, make sure your resume is something that your employers will find attractive.

Consider the industry you’re targeting.  If the job calls for someone who has a strong sales experience, emphasize your sales background.  If the job calls for someone who had been involved directly in marketing and promotions, show your qualifications in these departments.  The more relevant your resume says you are, the better you’ll be at landing a recession-proof job.

Expand your reach.

Other than advertised job vacancies, consider other venues for finding recession-proof jobs.  Look for trade magazines, papers, clubs and associations.  You could also tap your network of professionals in the same field.

Get further education.

In tough times, you ought to arm yourself with tougher credits.  One is by obtaining additional training or education.  Getting certified or expanding your professional qualifications will help make you a more desirable hiree.

Recession-proof jobs are usually the most popular among jobhunters who are probably considering the same strategies as you right now.  It’s likely that for every recession-proof job that is available out there, there are thousands of other jobhunters out to get it.  If you have better qualifications courtesy of better training and experience (in case you’ve had hands-on education or internship), you’ll come out as the best, most capable candidate.

( 0 )

February 16th, 2009

One of the ways to cope with recession is considering a career shift. Not too many likes the idea of changing career plans during a downturn. However, if you have already felt the effect of recession – say you’ve been laid off, why not give a different career path a chance, right? It may not have quickly crossed your mind to prioritize job security when choosing a job. However, whether you are choosing your first job or making a switch, it can be helpful, particularly during our present economic situation. Indeed, no job is 100% secure. But there are some industries that have workers feeling more confident that even if they get fired, the demand is so great that finding another job would be very easy.

So how do you choose a career that’s right for you during a recession? Here are some recession-proof careers that are worthy of consideration:

Education

There is a great shortage of teachers. No matter how down the economy is, teachers will always be in-demand. Children will continue to go to school. Also, lots of unemployed adults may decide to further their education. Although teaching is not one of the highest-paid careers there is, making only about $30,000 to $45,000 a year, people will still settle for a career that does not earn more because they are tired of being unemployed for a long time. This is especially true for those who would want to try something new anyway or those who despise the roller-coaster rid that a corporate life offers.

Healthcare

Job hunters with Information Technology background are said to be a good fit to the healthcare industry – particularly nursing. This is because Nursing is an information-driven career. And, it is one useful career during a recession because healthcare is an industry that does not usually get affected during these times.

Auditing

Auditors are also usually unaffected by downturns. In a recession, individuals and firms are more probably doing their best to get more deductions. More people are monitoring their books, so the demand for auditors or accountants is much greater.

Energy and Utilities

Energy consumers may cut back, but the consumption will not stop. The same with utilities, people will still light their homes. So, jobs like maintenance and utility administration prove to be more stable than others during a recession.

Pharmaceuticals

As long as physicians prescribe drugs, people are still going to take them. This means that if you are working as a pharmacist or as a quality assurance analyst in pharmaceutical laboratory, you are in good hands.

Military

Since the military is always hiring, particularly during wartime, during a recession soldiers will not be that affected.  Serving the military also means that most of your living expenses will be covered.

Security

Recession does not stop crime. With the increase in layoffs, more people are considering robbing banks and doing other crimes. So, the need for security workers becomes greater.

Environmental Sciences

The convenient truth is that the eco-friendly trend is not going anywhere. This means that choosing a career in environment-care-related industries can be a good career choice.

Government

Working for the government can be one of your best choices during this downturn. This is because many stable jobs can be found in the federal government. The government will not cease from functioning even during crisis.

With that variety of career choices, it will not be that difficult to find one that will save you from this economic situation.

( 0 )

February 12th, 2009