There’s been a lot of talk about recession lately. You’ll find discussions of an economic slowdown just about everywhere: the evening news, printed across newspaper headlines, and even the discussions we have within our social circle. Unfortunately, this is what many experts are predicting as we head into 2023.
But it doesn’t have to be all doom and gloom!
While economic downturns can be difficult for small and medium sized businesses, there are steps you can take to help your company survive and even thrive during these times. Here’s what you can do to get ready for what’s coming:
- Be proactive: You wouldn’t begin preparing for a hurricane when it’s at your doorstep! Preparing for a recession is no different. Now is the time to take stock of your business and develop a plan for how you’ll weather the storm. Start analyzing your finances and identifying areas you can cut costs and/or increase efficiency.
- Build up your cash reserves: Having a healthy cash cushion will help keep your business afloat during the most difficult times. Experts suggest having enough cash to cover at least three to six months of expenses.
- Managing costs: Look for ways to reduce ongoing expenses. For example, you can negotiate better deals with your suppliers, find more cost effective healthcare plans for employees, or develop ways to improve efficiencies across your staff.
- Focus on customer service: The best customers are the ones who come back for more! Providing excellent service will help you retain customers throughout a recession. It can even help you attract new customers through referrals and positive reviews.
- Diversify your customer base: As the old saying goes “Don’t put all of your eggs in one basket.” Relying on a single customer or group of customers for all or most of your revenue can be risky. Diversifying your customer base will make your business more resilient to downturns.
- Be flexible and stay informed: You’ll want to keep an eye on economic indicators and trends in your industry. Doing this will help you anticipate challenges and allow you time to respond properly. And as market conditions change, it may be time to consider offering new or modified products and services that better meet the needs of your customers.
This isn't the first recession we’ve gone through and it certainly won’t be the last. The good news is that we’re not powerless to the economic factors out of our control. By following these steps and being proactive in your approach, you can ensure that your business survives through economic downturns and emerges stronger on the other side.