The current economic state has many people worried about what the future may hold. For entrepreneurs, this is a time of both uncertainty and opportunity. In this interview series, we spoke with entrepreneurs who have faced tough times before and offered advice on how to prepare your businesses for a potential recession. As an entrepreneur, it is important to remember that every situation is unique and you must adapt as needed in order to survive and thrive.
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Zephyr Chan
Title: Founder
Company: http://bettertools.io/
The country’s economic conditions are very unpredictable right now, and there is a lot of uncertainty in the business world.
These are all signs that a recession may just be up ahead on the road. In such times, businesses should take apt steps to prepare their companies for the upcoming recession and protect their interests.
One of the first things they need ot do is to pay off all their debts right now. This applies to people and their businesses. We have no idea how interest rates will fluctuate in the future. You don’t want to be saddled with debt during a recession. Your cash flows will be limited, and your debtors will be on your heels. As such, you should strategize now as to how you can pay off your debt as soon as possible. Create an aggressive strategy that reduces operational costs to free up cash to make repayments.
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Meera Watts
Title: CEO
Company: https://www.siddhiyoga.com/
It is critical for our businesses to plan effectively in order to withstand a recession.
We keep a careful watch on our budget and keep track of our expenditures using a detailed sheet and report. This shows us where we can make changes to our spending habits to save money in those areas. Thanks to a good financial plan, we can readily spot difficulties and take the appropriate actions before the situation spirals out of hand.
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Matthew Roberts
Title: Chief Operating Officer
Company: https://www.mychoice.ca/
“Find different strategies to minimize costs without sacrificing your operational productivity. Controlling your spending is critical for recession-proofing your business because it will provide extra funds if financial difficulties arise. To save money, go over your monthly expenditures and then ask yourself these two questions. First, whether or not you truly need that particular expense.
Second, whether or not there is a less expensive alternative to that specific expense. In certain circumstances, you may be spending money on something unnecessary, or you may not have identified the most efficient solution for your company’s needs.”
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Christiaan Huynen
Title: CEO & Founder
Company: https://designbro.com
Recession can take the economy by storm, leaving companies in severe financial distress. So, the best way to tackle this situation is by diversifying your customer base. This is important for companies that cater to a limited target audience.
That’s because you can’t heavily rely on your loyal customers as recession impacts everyone. Additionally, you can prepare ahead of time by investing in better marketing strategies that boost your engagement and conversion rates. As a result, it will ensure a positive cash flow before difficult times. This money can be set aside for a rainy day when you need to re-invest to attract your target audience.
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Mario Cacciottolo
Title: Manager
Company: https://www.sbo.net/
When considering preparation for a potential recession, I would advise you to start implementing cost-cutting practices sooner rather than later. If there are things you can do today that will save you money tomorrow, do them. Take a look at your staffing levels, are they sustainable? It may be necessary to implement a hiring freeze so that you’re not taking on any extra employee-related costs.
If you do need to reduce staff then it could be worth offering a financial incentive to those approaching retirement, for instance. This short-term expense could save money in the long term. Think about location.
Do you need to be renting office space or is it possible to adopt a Hybrid/Remote Working model? It’s possible to save a lot on overheads such as rent and utilities. It can also help reduce commuting costs for you and your employees. Diversify your income stream. If there are projects outside your sphere which could bring in extra revenue, get creative and think about ways you can contribute to them for a financial return. Don’t be afraid to think outside the box and consider all ideas before dismissing them.
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James Chapman
Title: Founder & Director
Company: https://www.bellabathrooms.co.uk/
As a small business the possibility of entering into a recession is worrying to say the least. Our business model relies almost entirely on sales through our online platform. We have been assessing ways to streamline our operation to increase our spend on marketing.
During down-turns in the economy small businesses tend to cut the marketing budget first, which is of course a bad move. Upping your marketing budget will increase your visibility, especially when those around you are quieter. In fact, this is a good opportunity to expand your client base.
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Tracy Acker
Title: CEO and recruiting manager
Company: https://getpaydayloan.co.uk/
How do you prepare yourself and your company to face it successfully? We’re putting money aside. We will buy time and options with our cash reserves. They are crucial in preparing for and surviving a recession. Building a cash reserve is not difficult, but it is not easy. All we have to do is divert some of our earnings into a reserve savings account.
The difficult part is to leave the account alone unless an emergency arises. The cash reserves will be enough to cover our expenses for a while. As a business owner, I believe in keeping a larger reserve. Examine your financial statements to help you determine the appropriate size. We’re thinking about getting some funding. Having financing during a downturn will help our company survive and grow. Obtaining financing during a recession, on the other hand, can be difficult. When things are going well, it is easier to obtain financing. While things are going well, it is a good idea to set up an emergency financing line.
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Charles Cridland
Title: Co-Founder and CIO
Company: https://www.yourparkingspace.co.uk
Thinking of recession, we need to keep in mind that it impacts not only our business but our clients as well. They are likely to refrain from making some purchases and wait for a better economic environment.
Thus, you should adjust your marketing efforts for a longer decision-making process. You need to prolong the nurturing phase in your sales pipeline. Or, in simple words, work to create a nurturing email sequence with useful content to stay on top of the mind of potential customers up until they are ready to buy.
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Tom Greenspan
Title: Founder
Company: https://www.vsmattress.com/
A recession is a time when business activity contracts, but many business owners act as if the markets stop entirely. Suppose you’re in a market of 20 thousand potential clients.
Due to the recession, 5 thousand of them decided to cut expenses and would not consider your offer. 25% market volume decrease is huge! Is it the time to cut your marketing budget and wait for a better time? Absolutely not! You still have 15 thousand prospects to pursue. Thus, while our competitors are planning to go dormant, we thank them for the opportunity and increase our marketing budgets.
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Luke Lee
Title: Co-Founder
Company: https://www.everwallpaper.co.uk/
As someone who has weathered a few recessions in my business career, I know that they can be tough times. But I also know that there are things you can do to help weather the storm and come out the other side in good shape.
First, it’s important to take a close look at your spending and see where you can cut back. If you’re already running lean, then you may have to make some tough choices about where to allocate your resources.
Second, it’s important to stay focused on your goals and not get discouraged by short-term setbacks. It’s easy to become fixated on the day-to-day ups and downs of the stock market, but remember that recessionary downturns are usually temporary. Finally, it’s important to build up your cash reserves so that you have a cushion to fall back on if needed.
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Andrew Porwol
Title: Owner
Company: https://www.gardencentreshopping.co.uk/
With an entrepreneurial career spanning over 30 years, I have unfortunately experienced down-turns in the economy before. Streamlining your business processes is critical to weather the storm of a recession.
Start by reviewing each process asking yourself how you can make it more efficient and essentially cut back on costs. Where possible, look at automating processes, especially those that are labor intensive. Streamlining and automating your business now will help you stay agile and efficient.
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William Donnelly
Title: Founder & CEO
Company: https://lottie.org/
The following tips can help you and your business to limit the impact of recession: First of all, you should maintain and improve relationships with your stakeholders. It would include your customers, employees, creditors, suppliers, etc.
These relationships can help your business to survive a recession. For example, a loyal customer would keep using your business, even when times are tough and your competitors are offering lower prices. On the other hand, maintaining a good relationship with your supplier or creditors can help you gain access to vital lines of credit and raw materials during hard times. You can also diversify your offerings.
By offering varied products you can diversify your revenue stream. During recession, certain types of products might see a reduction in demand, but due to its diversified product list, some products will continue to generate revenue, and keep the business afloat.
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Tobias Rawcliffe
Title: Head of Marketing
Company: https://www.number1plates.com/
“Diversifying income sources is an essential step for a business to thrive even when the economy is down. This is because a company’s primary revenue stream may not work effectively during this turbulent period.
For instance, operating a physical store might not have been feasible during the lockdown. As a result, allowing customers to purchase from you online or offering pick-up services will help your business survive even if the economy is in a slump.”
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Javed Khattak
Title: Founder & CEO
Company: https://www.javedkhattak.com/
Major institutions and financial experts have flagged that a recession is close by. Some even predict that it will hit us this year. When it does, the economy will suffer due to an increase in inflation and a decrease in overall growth. We have already started seeing signs of it.
It is imperative to stay on one’s feet in the current environment, being prepared for a major recession. Being a founder of several businesses (learn more at www.javedkhattak.com), I have ensured that each one is equipped and ready to tackle the challenges of a recession.
Within each of my businesses, we have made every process as tech-driven as possible. Taking a holistic approach enables us to identify and solve key problems in the various organisational processes. By discerning our resources and turning all points of reference into actionable data, we have built a data infrastructure that’s very actionable. All bottlenecks have been removed through automation and technology.
We have also taken sufficient time, through trial and error, to identify the right tools and technologies to use. This includes developing them ourselves, where necessary through my tech company, Seerbytes (www.seerbytes.com). It enables us to perform complex AI-based analysis to reach outcomes that benefit the organisations in our ecosystem and develop disciplined approaches to implementing them. This well-built infrastructure allows us to keep on identifying and testing new metrics and KPIs. This, in turn, helps us identify new opportunities and adapt to the changing global markets, especially in a recession as strategies need to evolve and be implemented instantly. Our tech strategy, explained above, is underpinned by financial awareness. Being a mathematician at heart, the numbers need to make sense. This means investing where we need to with a long term view, minimising costs and maximising ROI. Having said that, we do appreciate the value of intangibles and goodwill – as loyalty can’t be bought both for internal stakeholders as well as clients externally.
This nicely segues onto the team aspect of the equation. A strong team is also crucial, and our programmes ensure we attract tech-savvy talent and retain them. Our hiring process with strict criteria, rigorous ongoing training, access to opportunities that are not available elsewhere and genuinely building relationships mean our talent pool remains relevant and engaged, with a high retention rate. We also make innovation an ongoing discussion. Team members are incentivised for offering novel solutions in different ways that ensure sufficient upside potential is shared with them e.g. through equity sharing agreements.
Our R&D team is amazing, ensuring we stay ahead of the curve. The R&D team keeps a watch out for the latest market trends and competitive environment. Technology is treated as an investment, rather than an expense. Reducing any productivity gap, by developing custom cloud-based applications, and working in tandem with the best SaaS solutions in the market, helps us deliver on our promises.
In the end, I am glad that our strong corporate governance, embracing digital capacity at the core and deep ethical values – virtue, righteousness, transparency, consequence and context – will help us thrive in the recession, rather come out even stronger.
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Adam Ng
Title: CEO
Company: Trustedmalaysia
In March, annual inflation reached a 40- year high, prompting the Federal Reserve to raise its benchmark rate by half a percentage point; this was the most significant hike in two decades.
That’s on top of months of stock market volatility I prepared myself and my company to eliminate company-specific risk by diversifying our portfolio; we opted for funds rather than individual checks. Informational, we made suitable investments; with inflation rising and low savings account yields, it become less attractive to hold cash.
Mixing of growth stocks, which are generally expected to provide above-average returns, and value stocks, typically trading for less than the asset is worth. Knowing what to invest in during a recession is paramount. I also prefer Value stocks; they tend to outperform growth stocks
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Leslie Gilmour
Title: CEO
Company: https://befound.ie/
I’ve been running my business for a long time, and our company has seen many ups and downs in the economy. It’s hard to say without knowing your sector or industry, but it’s always a good idea to diversify into cyclical niches within your sector. But, when you are in marketing like i am, “cyclical products” are not so easy to define. But, for us, that is brand recognition.
While our clients’ customers may not be as willing to spend as much money in a recession, they are still on Google and Facebook trying to kill time. When times like this come, we shift our main focus to helping our clients get and maintain brand recognition.
Then, when the economy stabilizes and people start spending more, their revenue will spike as a result of having better brand recognition. So, in times of certainty, we need to be more than just a marketing agency. We need to be business consultants.
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Rhys Jeffery
Title: Small Business Owner & Blogger
Company: www.hakune.co
To kick off – A recession if it comes won’t be any worse than covid for a lot of business owners. So my first piece of advice would be to reflect on how you managed your business during COVID. What did you do poorly, What did you do well? Those lessons are going to be useful for the next time you face a downturn in your business.
Secondary to that, basically we’re talking about mitigating risk here. Downturns generally lead to lower revenue, tighter lending, higher lending costs and at the moment high inflation.
By far and away the best thing you can do is increase the margin of safety in your business across key numbers.
Here’s some examples.
How much cash on hand do you have? How long can you survive with no or lower revenue? Increasing cash on hand, increases your margin of safety.
How much are you drawing from your business? what can you survive on – Lowering your lifestyle expenses will give you more leeway and room to breathe if you have to draw less income from your business. Being able to survive on less income increases your margin of safety.
What is your net profit margin? How far can revenue drop before you are net negative? Analyze the costs in your business and see where you can cut costs i.e. unnecessary spending and or reduce costs by using lower cost alternatives. Making your business more efficient and increasing net operating margin increases your margin of safety.
And finally – **warning** you have to be a competent operator to do this.
Go on the attack. I’m from NZ and when the government started locking all our businesses down, I knew gyms were going to suffer in a big way – we ended up losing 40% of our members.
But we weren’t alone. Everyone else was suffering too. All our competitors went on defence. They cut all marketing, they didn’t get new equipment, they let go of staff, they reduced open hours and so on.
So we went on the offensive. We doubled our marketing budget, we brought $30,000 worth of new gear, we brought on new trainers and coaches, we upgraded our website, we increased our prices and we launched a new membership tier.
It’s been ~12 months since gyms were allowed to re-open again. We have 550 members now, 150 more than when we entered lockdown. While competitors have closed down or are still struggling to get back to pre-covid numbers. We’ve grown revenue 100% in 18 months and increased profit ~5x.
When everyone else is running scared – go on the attack.
Two other companies I’m a co-founder and advisor of have done the same and seen similar results. Both are up ~100% revenue in 12 months.
Anyway, enough from me – hope that helps.
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Ishu Singh
Title: Founder
Company: https://startingtoknow.com/
A recession is coming, and the best way to prepare yourself and your company for it is to be ready to adapt.
In good times, we can plan for the future by anticipating how our business will grow and what needs we’ll have. But when the economy heads south, it’s important to be able to pivot quickly and adapt with your company goals in mind.
If you’re looking for a few tips on how best to prepare yourself and your company for recession-proofing, here are a few things you can do:
1) Create a long-term business plan that includes potential opportunities as well as challenges that may arise during tough economic times.
2) Keep track of key metrics such as revenue, expenses, and profit margins so that you have an accurate picture of where your business stands financially at all times; this information will help you make smart decisions when the economy takes a turn for the worse.
3) Be prepared with contingencies such as a savings account or emergency fund (if applicable) so that if something unexpected happens—like losing one client because they went out of business—you can continue running smoothly without having to lay off employees or stop paying bills immediately due to lack of funds available.
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