The reduced availability of credit makes it impossible for small businesses to overcome temporary deprivations by simply borrowing in the conventional manner. Consequently, companies without an adequate support structure cannot continue operating. The key is to find creative ways to maintain solvency–and thus stay afloat during an economic downturn.
A study reported in the Harvard Business Review reported that the companies that fare the best during economic downturns are those that are focused on future growth (thus taking proactive steps for the long-term) rather than cost-cutting (with eyes only on the short term). Check it out at https://hbr.org/2019/04/companies-need-to-prepare-for-the-next-economic-downturn
The message there is simple: “Focus on technological competitiveness” and “don’t lose sight of your long-term transformation agenda.”