While you might be an optimistic person, the safe thing now is to assume a recession is coming. However, as long as you prepare and start recession-proofing your business, you can weather the storm.
How Can We Be Sure?
Almost nothing in life is an absolute certainty, but when a majority of economists now consider a global recession at least somewhat likely, it’s better to be safe than sorry.
You can never be 100% sure, but widespread layoffs, hiring freezes, rising gas and grocery prices, and slowing home and auto sales are all signs that point to an incoming recession.
Recession-Proofing Your Business
Due to the inherent nature of certain products or services, some enterprises have the luxury of being recession-proof. For those that aren’t, and plan on being in business for a long time, recessions are just something you’re going to have to plan for, and you’re better off doing that ahead of time.
1. Invest In Your People
Hiring a new employee can be expensive, not to mention the loss in productivity while you search, and train, and perhaps search again.
Investing in the employees you already have also has a double benefit. Firstly, it helps your business stay flexible, agile, and responsive during a recession. Secondly, businesses that reinforce the personal growth of their employees get stronger, more committed work in return.
2. Create Steady Cash Flows
The best way to relieve stress during a recession is by making sure you have a steady and predictable income. When it comes to sales, ups and downs are natural, but try creating subscriptions, yearly plans, or other recurring sales opportunities. High peaks and low valleys can be scary, especially during a recession, but knowing that your model is profitable can offer much-needed peace of mind.
Check Out Another Blog: 6 Deductible Business Expenses For Your Small Business
3. Strengthen Relationships
New business is much harder to come by than repeat customers. During a recession, parting people from their hard-earned dollars is an even tougher task.
The clients and customers you already serve are the much easier sell, so ensure their needs are being met and nurture that relationship, well in advance of picking up the phone and asking for the sale. Now is the time to double down with marketing and value adds. Recessions are a nasty business. If you can keep a consumer happy through the tough times, they’ll be yours for life.
4. Reduce Overhead
This one takes some careful consideration but, if done right, it makes a huge difference.
Reducing overhead can range from small trims to drastic changes. Most business owners never want to resort to layoffs. You could renegotiate deliverables with service providers, switch to a remote or coworking strategy, and more.
It’s important to be honest with your employees. Yes, temporarily cutting some perks is a bummer but, if it means everyone gets to keep their jobs, it’s a fantastic compromise.
5. Modify Your Product Or Service
It’s time to start meeting your consumer where they are.
Modifying your product or service might not be something you would do ordinarily, but a recession is an extraordinary circumstance. Offering a cost-friendly alternative, by adjusting shipping margins, bundling products and services together, spacing replenishment cycles, or downsizing the product itself, is a viable way to allow consumers to stretch their dollar. You don’t necessarily have to take a loss. Find a way to add value while ensuring your business remains viable, and profitable.
6. Focus On Your Strengths
This might sound like a no-brainer, but it’s a crucial part of recession-proofing your business, and it’s often overlooked when people are under pressure.
Is there something sitting in storage for longer than it should? There might be a product or service you know is going to sell, but it needs time in the market or a proper campaign behind it first.
Especially during a recession, focus on where you are profitable, not just busy. You will want (and likely need) to be the most productive with your time. Market your biggest moneymaker and leave the other stuff for less turbulent times, when people and businesses have more discretionary funds.
