Prepare for the Recession Now
Most economic analysts are forecasting a recession. After all, we’ve been through a pandemic, a baseless and brutal war ongoing, and the cost of living skyrocketing as a result we now face a looming recession.
What should you as the business owner of an SME be doing right now?
In Happier Times
Normally we expect to see SMEs invest in the business when things are going brilliantly. The revenue is flowing in, cash flow is healthy, and the overall vibe is feeling flush with positivity.
Interestingly, larger organisations follow an opposite cyclical pattern. They typically don’t invest much during the good times. They do it when things are on a downturn and things are usually easier to get at a better price!
So What Should SMEs Be Doing Right Now?
With a recession ahead, SMEs should be preserving cash with tougher times around the corner. They need to make sure their revenue cycle is as tight as it can be. All manner of unnecessary costs should be cut now. And recruitment? Hold off if they can. Lastly, don’t take on any more debt if they can help it.
When you can prepare before the downturn hits, there will be cash flow to invest again, and wisely.
The difference-making point here is preparation. Businesses can survive a recession and then thrive afterwards.
But, if you aren’t prepared, when a recession hits in most cases companies switch to survival and defence mode. Slashing costs and running on the bare minimum quickly and not taking the time to adjust gradually. This often means it all hits the fan and everyone is extremely stressed.
5 Golden Rules for Recession Planning
1. Reposition Your Brand
If there is an opportunity to reposition your brand now, it’s a good idea to think about it to survive what’s ahead. Better to do it now before things really get rocky. Every business is different, but there are some key points to consider:
Can your products or offerings become a need instead of a want?
Is it possible to have a lower-cost option that can keep cash flowing in? Now is the time to implement that.
Could your target audience become those who will better be able to continue to spend during a recession?
2. Financial Clarity
It’s up to you to know your figures. Complete clarity is essential if you want to know how much reserves you need to build up to be able to invest wisely into property options or tech that becomes suddenly more available at a fraction of the usual cost.
Marketing usually becomes more affordable too so SMEs should take advantage of that too.
3. Make the Necessary Moves to Grow Your Business Now
Take the offensive position and make moves during the recession. Or end up like those who didn’t prepare and strike the defensive pose.
There is no in-between that channels Gloria Gaynor and says ‘They will do their best to Survive’. That isn’t a strategy. That is an attitude that is placed on fear and emotion, head in the sand sort of stuff.
Make a decision and decide how you will proceed to succeed.
4. Sell as Much as You Can Before the Downturn
You can’t build reserves without selling while the majority has funds to spend.
This might mean changing up your old offers, rethinking your marketing, or even your funnels.
5. Consider Staffing
Many people will be let go during a downturn, but that also means there will be valuable people on the market when the recession is in full swing.
Think now about what staff you need to hire so you can recruit essential top talent that may have eluded you in happier times.
What Will the Recession Make You Decide?
The bottom line is that when we know a poor economic forecast is on the horizon, you can either choose to stay in the game, be sidelined, or run for the hills.
Smart planning and preparation will give you the best odds of surviving and thriving in a recession.
Don’t say we didn’t warn you!