10 Tips To Recession-Proof Your Business

Even at the best of times, owning a business can have its challenges. So when talk of a potential global recession continues to swirl around, it’s natural to feel apprehensive. 

Although the prospect of an economic downturn is no doubt daunting, confronting the possibilities before the snarling beast darts through the door can help to diminish its impact and influence. 

Even if the economy contracts, there are still plenty of financially prudent moves you can make to help keep the situation under control. Get on the front foot with these 10 helpful tips and take the necessary steps to recession-proof your business before the worst of the storm hits.

We’ve also outlined some handy hints on how individuals can prepare for a recession as well.

10 Simple Steps to Recession-proof Your Business

Understand your cash flow

Firstly, how well do you really know your numbers? Dive into the details, have a defined profit plan for the future, and ‘push and pull’ depending on the prevailing financial conditions and evolving economic landscape.

Secure capital in advance

Recessions typically tighten the loan approval process, so act sooner if extra funds are required. Remember: it always helps to talk to your lender sooner rather than later.

Create distinction and deliver remarkable service

Define your business’ niche, and raise its essentialness to your customers even when times are tough. We’re talking about going above and beyond and becoming irreplaceable. Loyalty comes from doing what you do better than anyone else. 

Diversify revenue streams

COVID-related lockdowns demonstrated just how much diversity can aid a business. If you’re not already a creative thinker, now is prime time to consider some new sales streams—and make a plan to pivot if required. 

Strengthen relationships

Regular communication with partners, suppliers, and customers is even more important during periods of uncertainty, to help maintain stability and tackle any unforeseen challenges. Think about who you rely upon— and who might need to rely on you—and keep those relationships as tight as possible.

Reconsider big investments

Re-evaluate costs and timings before undertaking expensive projects or upgrades. Consider delaying them until the financial landscape improves, no matter how tempting it might be to push forward with that exciting office renovation. 

Keep talking to your customers

While landing new customers is always desirable, don’t overlook the loyal audience that helped build your business. In fact, now is the time to keep the channels of communication open and invest in the audience you already have. 

Take stock of your workforce

Do your employees have a solid cross-section of skills? Where are the gaps? Is your workforce agile in times of crises? These should always be ongoing considerations, but they take on added importance during times of turbulence.

Lead the way

Are you simply ‘the boss’ or are you a genuine leader? Now is the time to demonstrate to your employees that you are leading from the front. Inspire them with tangible actions to increase unity and provide the much-needed reassurance that, together, you can overcome any economic hurdles.

Keep marketing

This is critical. When business is booming, businesses often invest in marketing. But many tend to claw back during times of uncertainty or the threat of a recession. It’s a dangerous decision in a world in which competition for customers never goes away.  

Recessions test customer loyalty—most of us need to cut back on spending somewhere—and marketing is essential to fight fickleness and avoid lost customers and lost opportunities.

Just remember: while we can’t control if and when a recession hits, we can certainly take steps to limit its impact. If nothing else, the threat of an economic downturn gives your business a timely reminder to check in on its overall health and wellbeing and ensure you continue along the road to success. 
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