How to Survive a Recession
For many small business owners, the thought of a looming recession inspires outright doom and gloom.
Right now the majority of global economies are in dire straits with inflation, energy costs, and a general consensus that most households are holding off on expenditures as a result. The housing market is potentially about to go into free fall while the rental options are attracting a frenzy of attention quite likely never seen before.
So how do business owners prepare for a suspected downturn, dip, or even nosedive in the economy?
Here are some smart ideas to take on board if you want to be ready for anything in the foreseeable future. Being prepared will soften the blow when it comes to economic pullback for goods and services which characterises what a recession really is.
Remain Alert
It pays to be economically intelligent and pay attention to what is happening in the markets, even globally if not just locally.
If you can remain vigilant and on red alert to the ups and downs in your sector you can take action when those early warning signs present themselves. This might mean taking on clients and business you normally might not take on, but it can pay off in the end if it means keeping your client roster robust to see you through periods of stress and strain.
Act Quickly
When things slow down, it can be tempting to think that it’s a temporary blip in your finances.
However, the sooner you see any sort of decrease in your turnover the sooner you should act and ‘take the reins’. That might mean in terms of cutting costs, including labour costs, or increasing savings for future cash flow.
It’s also important to increase those reserve funds when things are going great guns and all seems financially well. Saving while you’re making hay means less stress for those times that are less so, keeping you afloat if the economy turns.
Manage Expectations and Expenses
Surviving a recession is just that. Going into maintenance mode and keeping your head above water.
Having lofty goals or making drastic changes to a business plan aren’t usually the aim at this time. So aiming to keep your business running and the bills paid is successful in itself.
Also, think about where you can cut some corners. If possible eliminate or reduce expenses where possible and streamline your outgoings.
Is all of your software being used to its full capacity or just occasionally by a few members of your team? Could remote working be an option or do you really need the bricks and mortar for your services? Can any members of your team be upskilled instead of outsourcing at a higher cost?
Good questions to think about. Dig deeper into your expenditures and see where it might be possible to trim down.
Network When Business is Healthy
It can come across as desperate or frantic when a recession comes along and all of a sudden every business in your sector starts to try and gain new business.
If you keep your marketing strategy steady even when things are financially sound it appears more authentic to prospective clients. Keep the client pipelines open and communicate!
Keep Your Employees Happy
Post-pandemic most employees say they want flexibility worked into their work-life balance.
And with The Great (and also Grey) Resignation, employee retention is at the forefront for businesses now more than ever.
Perks and incentives along with any other reward-driven benefits are essential for keeping employees on board when the going gets tough. Flexible hours, remote working, and bonus schemes are all worth considering for talent retention. It is becoming increasingly difficult to recruit in the current climate so inspiring your employees to stay with you is an achievement in itself.
Stay Calm
While it might seem simpler to get reactive and treat a looming recession as scary it becomes more important than ever to stay optimistic and positive.
If you do due diligence with your economic planning and your overall outlook recessions can also be a backhanded positive for your business. Weeding out the competition who did not do so!
Change Up Your Offerings
While it might not be possible for all businesses to do so, changing up your offerings can often serve small businesses well.
It might be a temporary offer, a sliding scale price point, a membership scheme, or an alternative type of package that works best for you.
Whatever you can brainstorm for new ways to execute or present your service or product a recession might just be the ideal time to try them out.
Laying the groundwork for surviving a recession is key to your business’s survival potential. Don’t be caught on the back foot and ensure that your entrepreneurial venture survives and thrives.
