It’s been a decade since the last major economic downturn in America. Since then, unemployment has declined to pre-2008 rates and recovery has been slow but steady. But the economy is cyclical, and two-thirds of business economists expect another recession by 2021. Is your business ready for a recession? Have you taken the necessary steps to make sure your business not merely survives but thrives the next economic downturn? If not, here is how you can recession-proof your business now.
Now is the time to plan ahead for any bumps in the road. When was the last time you reviewed your business plan? Is your budget sustainable? Are you spending too much on unnecessary expenses? What can you eliminate or reduce in your costs? Tightening your belt should be the first step in preparing for a recession, but beware of slashing too much.
- Market to the Max
Most businesses reduce their marketing spending and efforts, but not you. You will use this time to increase your marketing. Your business will gain visibility during a recession because your aggressive marketing strategy will be more effective with less competition vying for consumer attention. Increasing marketing is a long-term benefit for your business, too. The gains made during the recession will last after it ends. While your competitors are recovering from the recession, your business will be pushing forward with a larger presence than ever.
Diversifying the services and products your business offers is a common method of growing your sales, but diversifying your client base can help protect your business. If your biggest client went out of business tomorrow, would you follow suit? Get ahead of customer concentration concerns. Increasing your marketing can help diversify your clientele, further protecting your business in the event of an economic downturn.
- Bolster Your Cash Flow
82% of failed businesses cite cash flow problems as a cause. Will your business be able to make payroll or cover overhead during a recession? Will your business be able to fulfill orders and services for new clients? Think about which financing options will be sustainable and able to carry your business through a recession. Banks are less likely to loan to businesses during recessions, and online lenders charge sky-high interest rates.
Eagle Business Credit is a great financing option for businesses during a recession. Our accounts receivable funding is debt-free and tailored to your unique business. Approval decisions rely on the strength of your customers’ credit scores, not yours. As part of our back-office support, we offer credit checks on your potential customers at no extra cost to you. Invoice factoring is a great method of not only protecting your business but growing it as well. Don’t be caught on you heels when the next recession comes around. Take the necessary precautions now to recession-proof your business.