Real talk – This is one of the most challenging times to try to recession-proof your business, ever.
Of course, it’s never an easy task but living during a pandemic has hammered the market and forced entrepreneurs to upend their entire business approach. Your plans to hire that marketing pro, on hold. Investing in a new POS system, on the back burner. Networking over cocktails with investors, canceled. Any kind of economic downturn can make it tricky to make the right decisions when it comes to your money.
The truth of the matter is, the recession COVID-19 caused isn’t the first one in our lifetime…and it won’t be the last. Whether it’s a housing market bubble or a sluggish economy after an upset in the presidential elections, small business owners simply must be prepared, or they won’t be able to weather the storm for long.
I believe we have the opportunity to view the pandemic recession as a wake-up call. Now’s the time to review our financial strategies so that you can thrive, no matter what the economy is doing!
If you’re shaking your head and mumbling something about that being impossible under your breath, I’m here to tell you it’s not! It merely requires intentional forethought, savvy spending, and staying on top of your business finances.
Unfortunately, you can’t will the market to recover no matter how much mindful meditation or manifesting you do. Luckily, we at Alchemy Accounting stay on top of trends, so you don’t have to. Here are some tips and tricks to recession-proof your business.
#1 – THE BEAUTY OF BUDGETING TO RECESSION-PROOF YOUR BUSINESS
One of the best things you can do to gain control over your financial situation is to follow a budget. Wait, you already have one, you say? That’s great, but your financial diet on last year’s spreadsheet may no longer be reflective of where you are now. To stay ahead of an economic downturn, you need to get clear on how you’re spending your money and making progress towards the goals that are important to you.
Most of us have a strategy implemented, but during an economic downturn, it’s critical to reevaluate. It can be as simple as having a handle on how much money you have coming in and then creating an up-to-date strategic plan on how you’ll spend it. For example, before COVID, you were able to write-off expenses for client meetings, business trips, and holiday gift baskets that often feature some type of summer sausage. Many things that we once considered necessary to operate are no longer needed during a recession.
While you may not be sending impressive fruit baskets during a recession, other expenses will be vital. Again, during the pandemic, the business world came to terms with the idea that remote work is here to stay. That means it’s smart to invest in remote collaboration tools to ensure that you and your employees continue to work efficiently. Costs for the additional software can be offset by cutting down on office space and other real estate arrangements. Take the time to explore out-of-the-box alternatives that will get you more bang for your buck on the things that will move your business ahead during changing times.
#2 – GET IN THE (CASH) FLOW TO RECESSION-PROOF YOUR BUSINESS
We all know that “cash is king,” but having it on-hand during a recession can be a real challenge. Without cash to fuel it, your business cannot move forward. Cash flow management is the process of monitoring, analyzing, and optimizing what you earn and what you spend. Most businesses fail because of poor management. Let’s be honest, you can’t stay in business if you can’t pay your bills.
To weather economic storms, it’s crucial that companies develop and maintain a cash flow plan. Lack of cash flow can hamper operations along with growth, resulting in business owners having to make short-sighted decisions to stay afloat. Those types of decisions are more than likely to harm your company than help it.
By performing an analysis of your company’s cash flow regularly, you’ll gain a broader understanding of your business’s financial situation. The amount of money coming in and going out must be balanced in relation to your money goals. If you can get your company in the (cash) flow, you’ll be able to nama-slay your business.
#3 – GET DOWN TO BUSINESS AND RECESSION-PROOF YOUR COMPANY
Although most of these tips and tricks require you to be prudent about your approach, there are also opportunities to actively seek out new business and grow beyond your wildest dreams. When sales are sluggish, adding a new salesperson or service can give you an advantage over your competition. Businesses need to pivot and stay agile during a volatile economic environment.
Many small businesses depend on foot traffic and/or in-person sales, but the pandemic proved to us that e-Commerce and virtual services can thrive. Not only are many of these businesses doing better than ever post-COVID, but their business model may also have ultimately changed forever. For example, gyms and fitness studios are offering personal or video training sessions to live-stream their classes. Medical providers are offering non-emergency mental and healthcare options online. Professionals who work for agencies or firms can continue to provide services by quickly readjusting to virtual deliverables.
Transitioning can be challenging, but promoting your new services through social media channels or email marketing to current clients can open you up to brand new business opportunities that will bring home the plant-based bacon.
#4 – RECESSION-PROOF SWITCHES TO SECURE YOUR BUSINESS
We’re going to take a moment to build off of the last tip. So, what is a recession-proof business? They are companies that are part of industries that are not impacted by declines in the economy. Typically, these businesses provide staples that are essential to everyday life. This includes home and vehicle repair, groceries and goods or services like plumbing and electricity. Although these particular businesses are uniquely specialized, let’s dive into some more out-of-the-box businesses. Here are a few recession-proof or recession-resistant ideas that you might be able to add to your portfolio.
- Baby Products – Having a baby during a recession isn’t going to prevent people from needing diapers, pacifiers, or those adorable little onesies with “Mother Lover” printed on the front.
- Food + Beverage – Recession or not, people need to eat. While most people won’t continue splurge on eating out, look for opportunities to elevate your sales either online or utilizing delivery services.
- Senior Services – Healthcare and other services that cater to the Boomer generation are likely to never be out of demand. Whether it be helping around the house, running errands, or walking them through video chatting, there are lots of opportunities to grow your business here.
- Technology and IT – With telecommuting and remote work are truly going to be part of our new normal. The need for technology and other digital solutions will be in more demand than ever. How can you provide at-home services for your customers?
#5 – BE A BETTER BUSINESS
Even though it may seem like the wrong time to make changes to your business, you must consider making adjustments to accommodate for a recession. Since remote work will not be changing anytime soon. Explore new services or products that might cater to this virtual world we are living in. Perhaps update your website or social media strategy. Try bundling products or services that can increase sales during this unpredictable time. Encourage repeat business with loyalty programs or promotions. Offer incentives to clients who continuously pay early or on time. It’s worth your while to do a deep dive into your business offerings and expand on them. When it comes to developing your business portfolio in an economic downturn, we say, grow for it.
#6 – STAY IN GOOD COMPANY TO RECESSION-PROOF YOUR BUSINESS
Your human capital is one of the most precious assets you have, especially when you work for yourself. Because let’s keep it honest, if you don’t take care of yourself, no one else will. During times of crisis, businesses tend to make rash decisions because of the fear of the unknown. This can lead to cutting hours, salaries, and rounds of layoffs. Ultimately, this means you may be losing your top performers, potentially to your competition. If it’s possible, renegotiate their terms and show them that they are valued in non-monetary ways. Especially during difficult times, it’s important not to skimp out on the quality of products or services you provide due to being understaffed.
Customers will give you a little leeway during tough times, but ultimately, if you can’t compete, you will lose them. Customers understand their purchasing power and are willing to stay loyal to companies and brands that align with their values. For example, many businesses during the pandemic recession have been called out for their questionable moral and staffing decisions. Strategize with your team members on how you can all be accountable when it comes to building your customer base and increasing profitability. The importance of excellent service cannot be overstressed, especially during difficult times.
When it comes to recession-proofing your business, there’s plenty of lousy money advice out there. However, there’s potentially a more significant mistake you can make: DOING NOTHING AT ALL. We hear you. As people begin to feel even more overwhelmed by a lack of sales or stacks of bills piling up, you don’t think there’s anything you can do to change things. Well, this is going to cost you. That’s where our team at Alchemy Accounting wants to help.
Recession-proofing your business by outsourcing your money stuff can have real, long-term positive effects, especially during a recession! We know how difficult it can be to start even the smallest steps toward making your business recession-proof. The point is, we got you covered – during this recession and any others that might come along in the future.
We are always so darned grateful for all the questions and conversations we have with our community. We are here to put your mind at ease and get your money to work for you. As much as we love Biggie Smalls, we’re here to prove that mo’ money, does not mean mo’ problems. Give us a call now to recession-proof your business.