No one knows when the next recession will hit, but it’s always better to be safe than sorry. Here are some tips on how you can prepare your business – and yourself – for the next economic downturn. By being proactive, you’ll be in a much better position to weather the storm.
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Frank Barber
Title: Finance Expert
Company: https://www.oxfordgoldgroup.com/
The best way for companies to prepare for a recession and to successfully face it is by diversifying their options. This one thing can be your key to success during times of economic downturn. Diversifying means that you introduce a new product or service.
The increased number of products also boosts your chances of increasing profits and diversifying the revenue stream. So, instead of taking a hit during the recession, you will already be well-prepared for success and keep the business afloat. You must also keep your debts and other obligations to a minimum. It is a great way to expand your business, but only if the economy is in good shape.
So, if there’s a threat of economic distress, you must pay off all debts as soon as possible. This will stop you from worrying about paying off debt, especially if the industry is already in a financial crisis. Instead, you can focus your attention on other important things and protect your cash flow.
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Ashley Chubin
Title: CEO
Company: https://flyhi.com/
One of the best ways to recession-proof your business is to weigh worst-case scenario events and prepare for them accordingly. Having a financial budget and plan for the worst can keep you prepared so when a recession does hit, you can be ready. If you are a company that orders materials from suppliers to make your products, you can build trust with the suppliers in order to get credit from them.
As long as you remain a good payer, you will likely keep these terms with your vendors if there is a downturn which will help your cash flow. Consider obtaining some kind of financing. Having financing during a recession can help your business survive – and grow.
However, getting financing during a recession can be difficult. It is easier to get financing while things are going well. It is a good idea to secure an emergency financing line while things are running smoothly.
Strengthening your customer relationships is crucial. Take a moment to consider what else I can do to retain my customers. Is there anything I can offer them to keep them coming back for more products? This can be a loyalty/rewards program or asking your customers directly for feedback about what could be missing. Are there any products that you currently offer that are considered a necessity rather than a luxury? According to this article, when customers cut spending, they typically do so for luxury items.
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Renee Rosales
Title: Founder/CEO
Company: https://theara.com/
My main piece of advice for preparing a company for adversity is: Embrace Diversity. I believe that integrating a diverse range of employees will help strengthen almost any business. Neurodiverse people can offer unique insights and perceptions on situations, and often come up with innovative and original solutions to challenges.
Ensuring that your team is strong, supported, and integrated will help sustain good practice when facing challenges. Educating your employees, facilitating diversity, and assisting their unique needs, will bolster your company and enable it to adapt and thrive under pressure. It is vital to communicate, connect and nurture your employees in the present to help prepare them for an uncertain and potentially difficult future. Promoting diversity, inclusion and awareness can contribute significantly to this aim.
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Kimberley Silva
Title: CEO
Company: http://findpeoplefirst.com/
As the Recession is looming, I am empathetic about the employees. At the same time worried about the survival of my business amidst this situation. I do not want my valuable resources to suffer during this challenging period.
I have few plans to take over this recession smoothly without affecting the economic state of the employees. Every team is monitored, and the project lead decides the recession list based on the skillset of the developers and testers. I request them the list may be as minimal as possible, and the null result is also good. Based on the data, I connect with the respective person and offer them positions at lower salary packages, and they can continue if they are willing. Another alternate idea is restructuring the project teams by shuffling the resources and providing them with a different salary package. My foremost goal is to retain the employees and handle the situation positively.
Initially, I will prepare my mindset to face the recession period with a brave heart without breaking down while issuing pink slips to the workers. I value every employee, and their hardships helped me reach greater heights in my business processing. I do not want to lose them in any situation. Instead, find optimal ways to retain them without affecting the business growth.
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Victoria Mendoza
Title: CEO
Company: http://mediapeanut.com/
As a tech expert and as CEO of MediaPeanut, we have contingency plans in place as a result of our annual planning activities. We have anticipated the looming recession including the Fed Rate hikes since last year so we have already laid out several ways to buffer our company’s activities.
First, we have transformed from an in-office company into a fully remote company which means there will be lesser operational costs from lease rentals, utilities, maintenance and other overhead costs. In terms of productivity, we have funneled funds for the full transition of our team to remote work which includes assistance for equipment, internet connection, and furniture costs.
Remote work also allowed us to open our doors to outsourced talent/workers from outside the state and other parts of the world as well. We also planned to tighten our belts on other activities that would require extra spending like company trips, parties, and non-work related activities.
We have shifted these activities virtually as well. After all, we are still in a pandemic and emerging threats are still expected despite mass vaccinations. Due to higher interest rates, we are also not entering in some high interest loans that would further bring down our revenues and instead focus on how we just cruise through the recession and survive as a company with all our employees still with us in building a lean yet productive workforce. Personally, there’s no difference in terms of preparations for recession except maybe slowing down on purchases and not entering into loans that will put my personal finances at a disadvantage.
In terms of personal investment, I would usually go for no-risk to low-risk investments like high-yield savings accounts, series I government bonds, dividend paying stocks, gold, and fixed annuities as a hedge to inflation. While I have purchased cryptocurrencies in the past, I highly discourage people from investing in them due to high volatility of the crypto market right now.
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Randy VanderVaate
Title: President & Owner
Company: https://funeralfunds.com/
We’ve adapted new dialing technology to prepare our company for recession. Telephone dialing technology allows us to be more efficient and productive in our work processes. This means that we can make more sales with the same inputs, which is essential in a recessionary environment where businesses often operate on reduced budgets.
Additionally, new dialing technology helps us reduce costs by automating tasks that would otherwise be completed manually. Finally, adopting new technology gives us a competitive edge against other businesses that may not have invested in such innovative solutions. By being at the forefront of technological advancement, we position ourselves as a cutting-edge organization that can better weather the storm of an economic downturn.
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Adam Ng
Title: CEO
Company: https://www.trustedmalaysia.com/
As a business leader who has faced countless tough times; I have learnt how to prepare myself and my company to face recession effectively.
Here are some of the things we do;
We try to always limit our expenses: We try to review our inventory costs often and cut down on superfluous items. Employees are trained to reduce waste as much as possible. We adopted a buy-as-you-need method to better manage our costs.
Sometimes we review and cancel software subscriptions that are not really relevant. We try to make up for the software’s services by working better or assigning the roles to employees.
We introduce ways to achieve longer customer retention at every meeting. We introduced subscriptions to make sure that customers stay with us for longer periods. We also have embrace a wholly customer-centric approach to things to improve customer retention.
We have also increased our inbound marketing efforts and leverage fully on outbound marketing for effective marketing and lead generation at minimal cost.
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Joseph Dittman
Title: Owner
Company: txhighrisers.com
While it’s impossible to predict when or how a recession will hit, it’s important to be prepared for the possibility. By taking proactive steps now – such as strengthening your financial foundation, diversifying your income streams, and being agile and flexible – you can help ensure that your business is in a good position to weather any storms that come our way. As a result, I’m preparing myself and my firm for the possibility of a recession. I’m doing this by ensuring that we have a solid financial basis, diversifying our income streams, and being nimble and adaptable enough to respond swiftly to market developments. I understand how critical it is to be proactive and prepared for any potential issues that may arise.
I’m focusing on personal growth in addition to prepping my business for a possible recession. To ensure that I’m always learning and developing, I’m taking classes, reading books, and attending conferences. I feel that if I continue to develop and evolve, my company will be able to weather any storms that may arise. I’m determined to ensure that my company is ready for anything comes our way. I am certain that by being proactive and taking action now, we will be able to weather any issues that arise. And, knowing that I’ve done everything I can to prepare myself and my firm for whatever comes our way, I’ll be able to sleep easier at night.
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Will Yang
Title: Head of Growth
Company: https://www.instrumentl.com/
As a business owner, I am always mindful of the potential for an economic downturn. While no one can predict the future with certainty, I know that there are steps that businesses can take to weather a recession. Here’s how: One of the most important is to maintain a strong cash reserve. This ensures that you will have the resources you need to meet your financial obligations, even if revenue drops.
Additionally, it is important to be proactive in seeking out new opportunities for growth. Even during uncertain times, there will always be companies that are thriving. By keeping an eye out for new opportunities, you can position yourself and your company for success. You need to stay focused on your long-term goals. Though a recession may cause short-term setbacks, it is important to remember that it is only temporary. By remaining focused on your long-term vision, you can weather any storm and come out ahead in the end.
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Ryan Reed
Title: CEO
Company: https://www.trulogsiding.com/
FINANCING OPTIONS
Before you need a loan or a line of credit, it’s essential to investigate them. Even if you believe you can weather the storm and recession without borrowing money, now is the moment to educate yourself about your options. If you don’t need money right away or for a specific amount, a flexible alternative like a revolving line of credit can be a good fit.
CAPLines SBA
Small Business Administration (SBA) loans are well-known. They do, however, provide credit lines. There are four CAPLine solutions available to address a company’s short-term liquidity needs. These lines of credit, like SBA loans, aren’t technically from the SBA, but the SBA guarantees a percentage of them, making them less risky for traditional lenders.
Business credit cards
If you don’t already have one, now is the time to apply. Depending on your credit, you can even qualify for a 0% APR credit card. This is something that can come in handy in an emergency.
Factoring or invoice financing
Invoice financing, often known as factoring, is a frequently ignored type of financing. With invoice factoring, you sell your unpaid bills to a factoring company for a percentage upfront, and you get the rest when the invoice is paid, minus a fee. Factoring can be costly, but if you require cash before your invoices are paid, it might help you get through a difficult period.
CHECK YOUR INSURANCE
Now is an excellent opportunity to review your business insurance policy. A business interruption policy is something to look for especially. Business interruption insurance covers a company’s loss of income due to a disaster.
It’s time to dive into the details if you have business interruption insurance. Your plan may exclude economic losses caused by a virus or a recession, but it’s worth double-checking.
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Joe Mana
Title: Content & SEO Manager
Company: https://www.alyce.com/
The most important thing you can do to prepare for a recession is to have a plan. Begin by evaluating your current financial situation and considering what measures you can take to reduce expenses.
If possible, try to increase your cash reserves so that you have a cushion to fall back on if sales decline. Next, take a close look at your customer base and identify key segments that are likely to be most affected by a recession. Then, develop strategies for how you will reach out to these customers and what kind of incentives you can offer to keep them loyal. Finally, make sure your team is on board with your plans and prepared to work hard to implement them successfully. By taking these steps, you can give yourself and your company the best chance of weathering the storm when a recession hits.
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Ilir Salihi
Title: Founder
Company: https://incomeinsider.org
Entrepreneurs and small business owners should keep a healthy emergency fund in order to prepare for an economic downturn. A recession may not be on your mind while business is booming, but you do not want to get caught unprepared when cash flow dries up. Sock money away in a separate savings account and build a cushion that can cover at least three to six months worth of business expenses.
Careful preparation today can help ensure you can ride out whatever storm lies ahead. Ilir Salihi Founder IncomeInsider.org
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Mike Ward
Title: Founder
Company: https://thefinanceshub.com/
While I feel confident in my company and its future, I understand that the recession may cause some anxiety in my team. People will see the inevitable decrease in performance and might have some fears about their future employment.
At the same time, lower business activity means more free time for employees. To make the best use of my team’s time and make them feel secure, I planned a series of training sessions, online and offline.
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Corey Tyner
Title: CEO
Company: https://www.buyyodirt.com/
FOCUS ON CASH FLOWS
Cash flow is king, particularly in a downturn. Cash flow may not have been a principal focus for you during the good days. You probably didn’t have to keep a close eye on your finances to guarantee you didn’t run out of money because you had enough money flowing in.
Tough times might be frightening if you ignore your financial flow. According to a JP Morgan Chase survey, the average small firm keeps 27 cash buffer days. A typical business may satisfy all of its cash outflows (rent, labor, utilities, etc.) for 27 days without producing any money. However, not every company fits under this category.
Because cash is so vital to keeping a firm afloat during difficult times, such as a recession, do everything you can to stretch your cash reserves as far as possible. Among the most important things to do are:
Organize your receivables: It’s easy to let your receivables stretch a little longer than they should when circumstances are good. Perhaps your net 30 slipped to net 45 or even net 60. That’s no longer acceptable. Follow up on any receivables that are past due and collect them promptly. Consider charging late fees to encourage timely payments further.
Double-check your payables: When things are going well, and you’re busy, it’s easy to overlook this one. Examine all of your outstanding payables and their due dates. Check all totals to be sure they’re correct. If required, defer payments until their due dates.
Examine your books: If you haven’t been following a budget in your business, now is the time to start. Begin by examining your present expenses. Any unused subscriptions or services should be canceled, such as trade periodicals or a stock photo subscription. Challenge yourself to develop new ways to save money without hurting your business. Don’t go crazy with the cutting, but it’s time to get rid of the excess.
Negotiate payment terms with vendors: What are your current payment conditions with your vendors? Whether you pay upon receipt, ask if you can pay net 30 or perhaps net 60 for the next month. Your vendors may or may not say yes (after all, they’re struggling with their cash flow problems), but you’ll never know unless you ask.
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Kimberly Silva
Title: the CEO of FindPeopleFirst
Company: http://findpeoplefirst.com
As the Recession is looming, I am empathetic about the employees. At the same time worried about the survival of my business amidst this situation. I do not want my valuable resources to suffer during this challenging period. I have few plans to take over this recession smoothly without affecting the economic state of the employees. Every team is monitored, and the project lead decides the recession list based on the skillset of the developers and testers. I request them the list may be as minimal as possible, and the null result is also good.
Based on the data, I connect with the respective person and offer them positions at lower salary packages, and they can continue if they are willing. Another alternate idea is restructuring the project teams by shuffling the resources and providing them with a different salary package. My foremost goal is to retain the employees and handle the situation positively.
Initially, I will prepare my mindset to face the recession period with a brave heart without breaking down while issuing pink slips to the workers. I value every employee, and their hardships helped me reach greater heights in my business processing. I do not want to lose them in any situation. Instead, find optimal ways to retain them without affecting the business growth.
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Zach Blenkinsopp
Title: Owner
Company: https://digitalroofingcompany.com/
My number one piece of advice when preparing for a recession is to focus on Budget.
Keep a clear and up to date record of all your financial transactions and business expenses, however minor. Make sure this is accessible and ready to hand and check it frequently.
Keeping a firm grasp on finances will help you feel confident and prepared when it comes to the future.
Consulting a financial advisor can be helpful, despite the initial expense you can receive helpful advice and suggestions that will prove cost-effective and reduce financial strain in the long run.
When thinking about budget, keep consumer budgets in mind also. Many of your clients will be feeling the pinch when it comes to their purses and its important to prepare for this.
However essential the service you provide, people won’t prioritize what they can’t afford. Consider discounted rates for regular customers, special offers, and coupons.
Think about providing a range of services and products, which range in price. All those small sales add up and will help keep you afloat if times get tough.
Make sure your budget is sustainable and you aren’t routinely spending more than you save.
Also, make room in your budget for advertising and ensure people are aware of your business. Social Media is an affordable and effective way to do this.
The main objective is to keep business flowing and balance that budget. Remember, every customer counts and contributes to this goal.
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Vladimir Gendelman
Title: Founder / CEO
Company: https://www.companyfolders.com/
My name is Vladimir Gendelman. I started Company Folders, Inc. in 2003 and grew it into one of Inc.’s 5,000 fastest growing private companies in America for three consecutive years. I believe I am a great source for your article because, unfortunately, this is not my first recession.
I started Company Folders, Inc. with the mission of helping businesses stand out in the marketplace with superior print materials. That meant providing the largest online selection of high-quality presentation products and outstanding customer support. As we went into the recession in 2008, I stuck with those values and, while other businesses cut prices, I added product lines and expanded our customer support staff. That year, we grew 300 percent.
“As we face another possible recession, our plan is to stay focused on quality. Reducing prices means reduced margins and reduced margins eventually leads to cutting corners – cheaper materials, less cleaning in showrooms, fewer service staff, etc. It may save in the short run, but it hurts the brand in the long run.
Customers remember when they don’t feel great about a purchase. And they won’t come back. They come back when they have an excellent experience. And they leave positive reviews that draw other customers in. So, we’re continuing to offer the highest quality products and we’re doubling down on customer experience.
Currently, we are upgrading our CRM to provide customers with more touchpoints and improve communication. We are investing in software development to help customers more easily understand order details, upload artwork, and confirm orders. Our team is doing refresher training on pre-press processes so they can answer customer questions more quickly.
We’re also adding new product lines. Recently we expanded into poly binders, poly presentation folders, and poly presentation boxes. We’ll continue adding product lines, providing top quality materials, and enhancing customer experience, regardless of what happens with the economy.”
I am happy to provide further details. I am enthusiastic about helping others through my experience, so please send me a link when you publish, and I will be sure to share the post with my social media following.
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Chris Nddie
Title: Co-Owner
Company: https://www.clothingric.com/
Cut Down Your Costs Are there any costs you can cut down without compromising on quality
? Are there any contracts that can be renegotiated?
You need to identify and reduce non-strategic spending. Even petty expenses should be analyzed to find opportunities to save money. When the recession hits, your business should be free from any unnecessary expenses. This will significantly improve your chances of surviving in a shrinking economy.
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Brandon Adcock
Title: CEO Founder
Company: http://www.nugenix.com
If a recession is like trying to weather a storm, then the most important part is to know your plan before the storm hits. During a recession, many make-or-break financial decisions will be time sensitive, and there won’t be time to come up with a strategy when you’re in the thick of it.
Are there any assets you must offload first before prices drop?
What can you afford to throw overboard to save your ship if you start to sink and what must be saved at all costs?
Will you take a defensive approach, focusing on continuing your operations, or an offensive one, using your savings to take advantage of plummeting prices?
If you’re a business owner that doesn’t know the answers to these questions yet, you’re already behind schedule, and the time to plan is now.
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Hannah Dworkin
Title: CEO USScrapyard
Company: USScrapYard.com
A company’s life cycle has two different phases: booming phase and looming phase. During growth phase, profits are made, and during the decline phase, that profit is used to deduce how to keep the business sustain. Policies must be meticulously planned by the entrepreneur in order to avoid a hasty demise. When the first indicators of a recession appear, it is imperative to me that I begin preparing for the worst as soon as possible.
I believe that recession is like a termite that eats away at a company’s profits until nothing remains. My preference is to keep track of my finances so that I may fall back on them in times of need. Spending must be reduced as soon as a crisis with the economy or a company’s finances arise. Company’s policy on travel costs, per stipend, and white goods should be reevaluated at this time. Consequently, the cooperation will be able to conserve money to counteract the economic downturn.
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