When times get tough, business owners are left with some equally tough decisions. Today we’re going to discuss seven ways to recession-proof your business. This guidance isn’t about pulling off maverick maneuvers and thriving on the chaos. Rather it’s about surviving the storm and coming out on the other side, ready to get your business, and its growth, back on track.
Someone once said you can’t cost cut your way to wealth, which is why the points below mainly focus on preparing for the recession before it arrives, with smart planning that will minimize losses.
1. Keep Cash in Reserve
First up, you must maintain liquidity by keeping cash in reserve. During a recession, you can expect less income, so you’ll need a reserve to tap into to patch deficiencies and deal with any unexpected issues that may come up.
You can keep money in a dedicated savings account, or a low-risk investment account. While it might be tempting to throw money into something high-risk high reward, when a recession hits, it’s likely you’ll suffer for it.
2. Have a Frank Discussion with Suppliers
A big part of doing business is the relationship you have with your partners. You can only account for your own strategy, and so a recession could cause unexpected upheaval along your supply chain.
That’s why it’s important to talk to your suppliers about what plans they have in place during a recession. How will they adjust their prices? Can you expect delays due to a reduced workforce?
While other businesses might be cagey with this information, it’s important to approach them with sincerity and figure out how you may be able to collaborate during economic hardship.
3. Maintain an Agile Staff
One of the hardest parts of a recession comes when a business owner is forced to begin cutting their workforce. Chances are it’s an impossible call to make, and yet it must be done. You can guard against this by maintaining an “agile staff.”
Don’t over hire simply because you can afford to. More workers don’t necessarily mean your workforce will be more efficient. Instead of relying on extra workers, find ways to improve your workflow with the staff you have currently.
Tools, whether digital or physical and automation can step in to pick up the slack. Then when the time comes, rather than cutting workers, you can cut SaaS subscriptions, and sell off machinery instead as you scale back.
4. Monitor forecasts in a Recession
The best weapon is information. It’s why you’re here after all. Be sure to pay attention to financial forecasts and what is happening in the business world at large.
Pay attention to what power players are doing. They have entire teams considering looming economic hardship, so they may act before they need to. By paying close attention, you might be able to follow their plays yourself.
5. Build Strong Customer Loyalty
We mentioned relationships early, and none are more important than the one you have with your customers. Remember, a recession affects everyone, so people will be far more selective about where they spend their money when it’s in short supply.
By fostering strong customer loyalty through great offerings and excellent service, you can help encourage them to stick with you when the waters get rough.
6. Avoid Credit
The last thing you want to do when a recession hit is get into more debt. That’s why you should try to pay cash as much as possible when it comes to acquiring products, and auxiliary needs.
That said, if you have the resources, you can try and pay a little debt off during the recession. Creditors may get desperate during a recession, so it might be possible to talk them into accepting an agreement that sees you paying less to square what you owe.
7. Keep your Marketing in Top Shape
Finally, you want to keep your marketing in good condition. Marketing is something that requires constant attention, and doubly so during a recession. You want to keep generating leads to attempt to maintain growth where possible.
It may be wise to scale back spending on PPC and instead focus on longer-term strategies like SEO. SEO can take a while to get going, so it’s advisable that you get started ASAP.
By following these simple tips, you can weather the storm, see your business and staff through, and perhaps even edge out a few advantages. The most important thing to remember is that preparation takes time, so there’s no better moment than the present to get started.