# Building Economic Resilience in Tough Times Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-18 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Building Resilient Businesses in Times of Crisis Meta Description: Discover strategies to prepare your business for economic crises by learning from cloud and SaaS companies' resilient business models. URL: https://financedigest.com/building-economic-resilience-in-tough-timeshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1255397454-1736815005726-compressed.jpg) _![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/331-1736815005699-compressed.jpg)_ _By **Mitul Ruparelia,** Founder & Principal,_ [_Citius Partners_](https://citius.partners/) We are going through a major economic crisis, which has been compounded by several major events hitting us simultaneously. Many business owners are uncertain of the future. It can be easy for an owner to get stuck in a state of firefighting and panic in an attempt to safeguard their business. But that is not the [way to build a resilient business](https://www.financedigest.com/5-simple-ways-in-which-your-business-can-save-water.html "5 simple ways in which your business can save water"). Standing [back and checking you have the right foundations in place is the best way](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") to prepare for the recession and build for the future. But what are these foundations? [**Learning from cloud-based businesses**](https://www.financedigest.com/what-b2b-businesses-can-learn-from-b2c-e-commerce.html "What B2B businesses can learn from B2C e-commerce") During lockdown, Cloud and SaaS businesses reported strong financial results, many buoyed by the scramble to [remote working](https://www.financedigest.com/7-tips-for-building-a-positive-remote-work-culture.html "7 tips for building a positive remote work culture"). It is worth noting that some of these companies also had structural advantages that made their [business model](https://www.financedigest.com/learning-from-the-disrupters-how-finance-brands-can-build-transformative-business-models.html "Learning from the disrupters – how finance brands can build transformative business models") more resilient. These advantages include flexible business terms, easy customer on-boarding, minimal infrastructure, and [agile offerings to suit needs](https://www.financedigest.com/why-a-modern-organisation-needs-an-agile-approach-to-software-asset-management.html "Why a modern organisation needs an agile approach to software asset management") and evolving requirements. Flexible business terms allow customers to buy on a monthly basis, and thus scale (or cancel) in line with their needs. Easy on-boarding minimises friction for the customer and decreases time to revenue. Minimal infrastructure and inventory [mean cloud-based businesses](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") can flexibly scale their operation to meet demand. Cloud services are typically agile and can quickly adapt to changing [customer needs or regulations](https://www.financedigest.com/bahamas-regulator-holds-ftx-assets-pending-delivery-to-customers-creditors.html "Bahamas regulator holds FTX assets pending delivery to customers, creditors"). Even if your [business is not cloud](https://www.financedigest.com/how-cloud-computing-saves-businesses-money.html "How cloud computing saves businesses money") based, there are elements of these foundational strategies that ought to be considered. To start with, it is best practice to optimise your systems and [processes to gain efficiencies](https://www.financedigest.com/1-easy-tip-to-make-a-key-e-commerce-process-more-efficient.html "1 easy tip to make a key e-commerce process more efficient") and cost savings. For example, explore your customer acquisition strategy, and how you can further optimise the customer lifetime value (LTV) against the customer acquisition cost (CAC). If your business is affected by inflation, supply chain shortages, sanctions, import [delays and new tax](https://www.financedigest.com/german-industry-calls-for-delay-to-global-minimum-tax-bdi.html "German industry calls for delay to global minimum tax – BDI") tariffs, there are other strategies to build resilience. These are best [explored and implemented post a thorough review of your business](https://www.financedigest.com/from-sec-edgar-to-business-applications-exploring-an-alternative-to-manual-data-extraction.html "From SEC EDGAR to Business Applications: Exploring an Alternative to Manual Data Extraction"). **Common sense strategies** Every situation is different, but there are some common-sense takeaways that businesses can apply to increase their ability to withstand [economic storms](https://www.financedigest.com/how-digital-commerce-merchants-can-weather-the-economic-storm.html "How Digital Commerce Merchants Can Weather the Economic Storm"). By including a force majeure clause, it helps remove liability for natural and unavoidable catastrophes that may interrupt the [expected course of events and prevent contracted](https://www.financedigest.com/contract-caterer-compass-expects-2023-profit-growth-to-top-20.html "Contract caterer Compass expects 2023 profit growth to top 20%") parties from fulfilling obligations. In the event of inflation or deflation, you should adjust your [pricing in line](https://www.financedigest.com/austria-grants-credit-line-to-vienna-utility-squeezed-by-power-price-surge.html "Austria grants credit line to Vienna utility squeezed by power price surge") with the CPI. This protects you in the event of rising costs from suppliers, who may [increase their prices](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") monthly (or in recent cases, as we have seen on a daily basis). Although your prices may change, there is a strategy and approach that minimises customer churn. Prepare for fluctuations in [foreign exchange](https://www.financedigest.com/small-business-strategies-for-foreign-exchange.html "Small business strategies for foreign exchange"). If you operate in a foreign currency, consider fixing the [exchange rate](https://www.financedigest.com/currency-exchange-how-to-find-the-best-rates.html "Currency Exchange: How to Find the Best Rates") with your suppliers or including provisions that allow your prices to be adjusted with your customers. Or both. Negotiate extended payment terms. Smart businesses [aim to build](https://www.financedigest.com/lilium-aims-to-build-400-air-taxis-a-year-seek-grants.html "Lilium aims to build 400 air taxis a year, seek grants") a buffer between their income and outgoings to manage cash flow. For example, if you offer customers 30-day payment terms, you should aim for a minimum of 45-60 day payment terms with your suppliers. Require valid quotations before accepting an order. While verbal or indicative commercials are perfectly normal, however it is strongly advisable to accept an order only if it is accompanied by a valid and approved quotation. This [reduces the risk](https://www.financedigest.com/how-can-you-reduce-the-risk-of-fraud-in-b2b-payments.html "How can you reduce the risk of fraud in B2B payments?") of changes in price, availability, or timeframe. Work with multiple suppliers. It’s remarkable how many [businesses don’t](https://www.financedigest.com/pitiless-machines-will-kill-your-business-if-you-dont-respond-now-warns-servion.html "‘Pitiless machines’ will kill your business if you don’t respond now, warns Servion") see supplier management as a strategic issue until things fall apart. Being dependent on a sole supplier [limits your ability](https://www.financedigest.com/lack-of-collaboration-and-skills-shortage-is-limiting-organisations-ability-to-meet-ifrs-9-requirements.html "Lack of collaboration and skills shortage is limiting organisations’ ability to meet IFRS 9 requirements") to negotiate and introduces a single point of failure. Avoid it where possible. **[Business is a team](https://www.financedigest.com/why-now-is-the-time-to-implement-a-time-saving-business-model-encouraging-team-members-to-discuss-their-challenges.html "Why now is the time to implement a time saving business model, encouraging team members to discuss their challenges") sport** Treat customers and suppliers like partners. [Business is a team sport and works best when it’s based on trust](https://www.financedigest.com/trusting-your-gut-how-to-harness-the-power-of-your-business-instincts.html "Trusting your gut: how to harness the power of your business instincts"). If we take a team [mentality to business](https://www.financedigest.com/mental-health-in-business-during-a-pandemic.html "Mental Health in Business during a Pandemic"), we see our suppliers and service providers as part of our larger team. They all contribute in some [way to the success of the business](https://www.financedigest.com/5-ways-cfo-and-cio-collaboration-can-benefit-the-business.html "5 Ways CFO and CIO collaboration can benefit the business") and to the business goals. When we can openly collaborate on challenges and solutions, everyone benefits, and business will thrive. **_About Author:_** _Mitul Ruparelia is the founder and principal of Citius Partners, a London-based [revenue growth](https://www.financedigest.com/visa-revenue-growth-slows-more-as-tough-economy-sobers-spending.html "Visa revenue growth slows more as tough economy sobers spending") consultancy. He has over 20 [years of experience working with B2B technology businesses](https://www.financedigest.com/why-the-new-year-is-the-best-time-to-start-your-dream-tech-business.html "Why the New Year is the best time to start your dream tech business") that are underperforming, in distress or seeking exponential growth. He has helped companies scale to [valuations of over $1 billion](https://www.financedigest.com/allianz-puts-n26-stake-up-for-sale-at-3-billion-valuation-ft.html "Allianz puts N26 stake up for sale at billion valuation – FT")._ --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---