What is a recession and how can MSMEs make a profit

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What is a recession and how can MSMEs make a profit

What is a recession and how can MSMEs make a profit

The pandemic is making things complicated. In this case, the business seems to be dry. Many have fallen, sometimes even out of business. The deteriorating economic condition was exacerbated by the presence of the recession. The phenomenon most business people avoid.

In general, a recession is a phenomenon in which an economic slowdown occurs as a result of falling industrial and trade activity. A country can be said to be in a recession if for two consecutive quarters there is no progress. As a result, the country arguably collapsed, the economy stagnated.

The impact leads to various lines of business including MSMEs. Even though loan funds and cash flow were not as large as large companies, MSMEs were still affected by a tremendous recession. Then, what are the impacts of the recession on MSMEs?

Impact of the Recession for MSMEs

Purchasing Power Decreased

It cannot be denied that one of the prominent impacts of the pandemic is purchasing power. Dropped drastically even people prefer to save their money. Like it or not, MSMEs are also affected. Turnover that usually can be tripled, during a recession, even the return on investment can not.

If the purchasing power decreases, the flow of money for MSMEs will be hampered. There is no profit and more losses.

Work termination

One of the downsides that do become apparent is layoffs. This is due to decreased consumption activity. So that it spreads from distribution to production. If production decreases, what happens is a cut in members. If the situation doesn’t improve, what’s uncomfortable is the company going out of business.

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Interest Rate Increase

What’s terrible in a recession is interest rates. This is because interest rates have increased, the rupiah has dropped, and what has happened is inflation. Most of the MSMEs need credit. If credit is bad, who should they hope for?

If the interest rate increases by a percentage at the threshold, it is certain that MSMEs will not make loans. In times of financial instability, it can be very difficult to pay installments.

Non-Current Cash Flow

One of the things a business person has to think about is cash flow in the end. Because, during a recession, most MSME businesses experienced spending more than income. So, business people must be careful to manage cash flow properly.

Then, during a recession, the MSME business cannot benefit? Of course you can, but with the terms and conditions that apply.

Tips for Getting Profit During a Recession

Manage Product Inventory

What you need to pay close attention to is how to organize inventory. You will be confused because consumption has decreased but production continues. So this makes the sales figures lead to a decline.

So, to overcome this, you need to check the inventory. Also, check cash flow. Look for gaps so that the product can still be removed. Give an attractive promo. So that the product inventory is maintained.

Increase Marketing

Often during a recession, everything to do with business goes to a standstill. If you’re careful, it’s time to step up marketing. You don’t need to spend a lot of money on a marketing strategy. You can collaborate with other product brands.

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Besides you introducing other products, at the same time your product is also being shared by the collaborator. So, this method is classified as effective for increasing product sales figures.

Expanding Consumer Reach

The consumer is king. That’s the tagline for any business. So, you need to strengthen and expand consumers. The easiest way is to give special discounts to loyal customers.

Besides, you can apply a different strategy than before. Strategies that should be different from competitors. If you know the weaknesses of competitors, maximize them well. Look for loopholes and come up with something different to get new customers.

For your business to grow, don’t forget to advertise through the Froggy Ads service, you can start by advertising your products so that later you can increase visitors on your online business portal. Froggy Ads is an online advertising service that can help you control all your product campaigns. helps you target your desired marketing target and gives you many options to market your product.