Do you want to learn how to recession-proof your business? Are you worried that a recession will come and destroy your years of hard work? If so, keep reading.
Recessions or pending recessions can force a business to become leaner and more efficient, which can lead to increased productivity and profitability in the long run. Now let’s get that working for you!
I know many of you are tired, you weathered a pandemic and the idea of adding a recession to the list does not sound fun. However, with a little planning now, you will prepare your business for a recession and make it stronger and more resilient in the long run. There has never been a better time to prepare and here are my 5 tips to help you get started with making your business recession-proof:
1. Dave Ramsey will tell you Cash is King – and right now he is more right than ever. It is always a good idea to have a good ole emergency fund. A minimum of 2 – 3 months of expenses saved. Now is the time to start saving a little bit and put it into a separate account, one that you can’t touch very easily. I recommend a business savings account and attaching it to your checking account. Move a little bit every week into savings. **Here is a hint….hide it from your view online of your banking accounts, it can often be too easy to see extra money sitting there and want to use it. **
2. Cut back on expenses – now is a great time to do an audit of your expenses. Run a report and compare it to a year ago, anything gone up tremendously? Any new expenses that have been added? Ask yourself do you really need them? And watch out for those sneaky subscriptions that are on auto-pay. Check your c/c bills for recurring purchases and your smartphone under settings and subscriptions.
3. Maximize what is working – this is a great strategy all the time but one we tend to implement when there is a sense of urgency. What product or service is your number one seller, and really what I am asking, which one is the most profitable? What can you do to focus on increasing your sales in that particular area? Set a goal, get your staff motivated, and celebrate your wins along the way.
4. Apply for a Line of Credit and or a Credit Card – I know I know, Dave Ramsey just screamed NO Credit Card. Here are my thoughts on both of these: they are good to have in your back pocket, and just because you have them doesn’t mean you have to use them. A line of credit is a loan through your bank and you can access money when you need it. The upside is usually low-interest rates and low payments, the downside you have to have collateral against a home or business and there are closing costs. When it comes to looking for a credit card, look for low-interest rates, no annual fees, points, or rewards back in something that interests you such as airline miles, and only use it when you absolutely need it.
5. Recessions can lead to innovation – Necessity is the mother of invention, and businesses may be forced to develop new products and services to survive during a recession. In fact, that is my story. Back in 2008, I was 10 years into my Cookies by Design business and our country experienced a recession, I soon was watching a lot of my corporate orders dry up and could see the fear in my employee’s eyes that they might be next to lose their jobs. At about the same time as the recession, a show called Cupcake Wars was about to begin airing on the Food Network. I decided to jump into the Cupcake Market. Fast forward and the cupcake business became a National Brand, Cupcake by Design, and today can be found in 56 stores across the country. It grew my existing business by 300% and was a big factor in building a business that I was able to sell, which I did in the Fall of 2018. I encourage you to look at your business, your market, and industry trends. Is there something you can add without a huge investment that will add more revenue, value, profits, and renewed life to your business?
I can tell you now, the 2008 recession was the best thing that ever happened to my business, and with a little planning now, you will weather this storm just fine and come out stronger on the other side. If you want to have a free 30-minute call with me to fully understand how to prepare for a recession, you can book here. My clients are ready to take on any challenge after watching me speak or working with me one-on-one! I know with the right planning in making your business recession proof, you will come out strong on the other side.
**If you also want to learn more about Dave Ramsey, you can check out his website here!