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:

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