Steps Your Business Can Take to Survive a Recession

According to one recent study, there is a 96% chance that the United States will experience some form of economic recession within the next 12 months. If you need a single statistic to underline the importance of planning for your business, let it be that one.

Thankfully, this news isn't a guarantee of impending doom for your organization. Not only do businesses of all types survive recessions regularly, but some also manage to thrive. If you want to make sure you're as prepared as you can be for whatever the economy throws at you, there are several essential things to keep in mind.

Monitor Those Expenses

The most crucial step that you can take to survive an impending recession involves locating places to cut spending whenever you can.

This became particularly important during the economic downturn caused by the COVID-19 pandemic. With countless employees suddenly working from home indefinitely, businesses realized they didn't need massive offices or retail spaces anymore and used it as an opportunity to downsize.

Take a look at your recurring expenses, categorize everything into an order based on importance, and determine what you can live with and cannot. Along the same lines, use this as a chance to start re-negotiating any vendor contracts with terms that may not be as favorable as they once appeared.

Note that not only is monitoring your expenses not something that you "do once and forget about," it should also be done often - even during those times when the economy is objectively strong. There are always areas where you can cut, and trimming as much "fat" out of your expenses as possible is a perfect way to ensure that you remain protected even in the event of the unexpected.

Incentivize Cash Upfront

Another essential step you can take to survive a recession has to do with encouraging your clients to not only pay on time but to pay in cash upfront whenever possible.

To speak to the former, understand that most businesses deal with late payments regularly - but that doesn't mean there aren't steps you can take to mitigate the issue. If you haven't already, switch to digital invoices and an electronic payment system to make it as easy as possible for people to pay you. Make sure you know which outstanding invoices and make follow-up phone calls to keep things moving.

In collecting cash upfront, you could offer discounted prices and other incentives for people willing to pay now. Not everyone will take you up on that (as some might not be able to). Still, many of them will allow you to increase the amount of cash you have coming into the business, making sure you have enough reserves to help fend off a "rainy day" or two that may be coming.

Stay On Top of the Market

Finally, during uncertain economic times, it's always essential to make sure that you're being proactive about staying up-to-date with the market itself - at least to the extent that you're able to.

At a bare minimum, you need to regularly perform a market analysis to guarantee that you know exactly what is going on and that you've identified any pivots that must be made in the short term. To continue to use the example of the COVID-19 pandemic when consumer buying patterns and behaviors changed dramatically in a short window. Those organizations who insisted on pushing along as if nothing had changed tended to be the ones that suffered. Those who understood these changes and made quick adjustments with their efforts could make the most of it.

Likewise, read the news and make sure you're aware of what the projected impact of such a recession is likely to be. Right now, things are still far enough away to where nobody knows what might happen - just that something is (likely) coming. Things can shift quickly when that recession arrives, and the economy begins to detract. By staying in the loop about the larger economy, you have the actionable information you need to make more informed decisions on a day-to-day basis.

In the end, no business owner wants to deal with the impact of a recession - but that doesn't change the reality of the situation. At some point, you are likely to find yourself in this situation, and taking the appropriate steps today can help avert a potentially more significant issue tomorrow.

If you'd like to find out more about the steps your business can take to survive a recession, or if you'd like to discuss your needs with someone in a bit more detail, please don't delay - contact us to speak to a professional today.