Roadmap to Recession-Proofing Your Business
The Bloomberg Wealth newsletter recently reported the probability of a downturn in the next year is now 65%, up from 60% in February. In a recession, the economy slows down and people have less money to spend on products and services, but you can take steps to keep your business thriving during a potential recession.
Improve Your Cash Flow
- Review your financial statements, including P&L, balance sheet, and cash flow statement.
- Submit invoices promptly and work with customers to resolve outstanding payments.
- Downsize or share office space.
- Increase automation.
- Eliminate overtime hours.
- Respond to price changes in the marketplace quickly.
- Adjust pricing strategy where needed, not necessarily across the board.
- Look for opportunities to streamline your operations.
Focus on Core Competencies
- Invest in keeping your core product and services relevant and competitive.
- Monitor trends and customer behavior changes in your industry.
- Continue or increase your marketing efforts.
Boost Customer Retention Rates
- Don’t skimp on customer service
- Demonstrate goodwill towards your customers.
- Reward loyalty.
- Ask customers to post reviews online.
- Communicate the value of your products/services.
- Participate in community events.
Manage Inventory Efficiently
- Review order quantity and frequency against cost to identify opportunities for having less stock on hand.
- Knowing what products you offer are most essential to your customers can inform your stocking decisions — customers may have less to spend on nonessential items.
- Explore inventory management software if you aren’t currently using it.
- Use warehouse space rather than more expensive office space for storing goods and explore shared warehousing options.
Preparing your business to weather a possible recession isn’t all that different from following best practices in other times — you just need to be more diligent and rigorous about it.
If you would like to learn more about how this might apply to your business, let’s talk: