Recession-Proof Your Business
Business owners were required to adapt quickly during pandemic-related lockdowns, supply shortages, labor shortages, and inflation. Now, business owners face the risk of a recession.
In response to inflation, the Fed has implemented quantitative tightening which involves increasing the Fed Funds rate. This is making it more expensive to borrow and it has the potential to slow down our economy.
Over the past few months, we have heard several CEO’s of publicly traded companies warn of an upcoming recession. While we should always hope for the best, we should also prepare for the worst.
We can take steps to recession-proof our business by being mindful of the customer and our financials. We must first get into the right mindset and be willing to pivot when necessary. Innovation and expansion are possible when we are in the financial position to support it!
We can take care of our customers by understanding what is important to them and rewarding our best customers. It is beneficial to reach customers through stories and connect with them emotionally. As businesses and households cut back, we want our customers to consider us essential. We can also offer flexible client service agreements and/or payment plans.
Being mindful of our financials means that we need to pay attention to our cash flow, profitability, and our balance sheet. It is wise to reduce excess spending, manage inventory levels, and review current contracts related to supplies, rent, etc.
It is suggested to implement clever marketing strategies that don’t require a huge budget. Track your marketing key performance indicators. Which campaigns are achieving your desired results?
It is wise to look for ways to improve cash flow. It is also important to increase our cash position and reduce our debt. When possible, maintain unused lines of credit. Access to capital via traditional banks often dries up during a recession.
Business owners should consider strategic partnerships with other businesses which may help to reduce expenses and gain exposure to new markets.
Other ways to recession-proof a business include innovation, creating multiple streams of income, adjusting prices to improve profit margins, diversifying suppliers, understanding the drivers of growth, and becoming a market leader in your industry.
Some of the most successful businesses were started and/or expanded during a recession. Recessions can present opportunity. Look for the opportunities to thrive!
To learn more about LonaRock, LLC and our business finance consulting services, please visit our website at www.lonarock.com or contact us directly at 234-217-9033. We look forward to helping you reach your financial goals and helping you obtain the best possible financing for your company.