A recession is on its way, and although it is unlikely to go on for the rest of your life, it is unavoidable. However, you can be prepared.
A worldwide recession is on its way. Perhaps not today. Perhaps not tomorrow. But it won’t be long now. Do you hear the consistent economic drumbeat? Don’t ignore it!
A recession is on its way, and although it is unlikely to endure the rest of your life, it is unavoidable. That’s a fact.
Even if there are warning indicators to watch for — increased interest rates, deflation, stock market collapses, loss of trust in the economy, and so on — there is no magic formula to forecast when and how long it will occur. And no, you can’t count on cryptocurrency to save you.
For example, increasing interest rates and weak first-quarter growth have led some to predict that the next recession would occur sooner than later. Perhaps it will happen. But, then again, who could have forecast the economic impact that the coronavirus would cause at the start of 2020? Aren’t the best-laid plans no more than that…plans?
But, whether it occurs this year or in five years, it never hurts to be prepared.
According to a poll conducted a few years ago, 44 percent of small-business owners questioned had made no efforts to prepare for a prospective recession.
Recognizing that the unexpected might occur at any moment, it is more crucial than ever to be proactive in preparing your organization to weather the next recession. Here are three crucial areas to concentrate on.
1. Take care of your money.
Everything ultimately boils down to money. You can’t keep your business afloat if you don’t have it.
Create an emergency fund. Just as you (ideally) have money set aside for a rainy day, your company should have something for the unplanned and unexpected. Therefore, maintain at least three months’ cash reserves to cover everything from operational expenditures to staff payments. As a result, when the economy begins to collapse, quick and straightforward access to capital is critical.
Obtain capital. Please go into the coming recession knowing what you have access to, whether via investors, lines of credit, grants, or credit cards. This groundwork enables you to plan ahead of time rather than hurry to catch up.
Examine your spending patterns up close and personal. Is it possible to minimize expenses without losing quality? Do you have the ability to renegotiate contracts with vendors and suppliers? Determine the difference between strategic and non-strategic expenditure. Where can you cut expenditures carefully to increase the return on operational expenses?
Pay off your debts — sound advice, recession or not. If you have the means, pay off those high-interest loans or credit cards so you don’t have to make monthly payments.
2. Pursue new business markets.
When a company’s finances are tight, the first item that gets cut is its advertising budget. It’s challenging to invest time, energy, and money in something that doesn’t necessarily provide an instant return. However, even if the economy is a downturn, you must maintain your market competitiveness.
Consumers are spending less, and they are significantly more intelligent and demanding when they do buy. If you don’t get your name out there, you have less chance that your company will be the one people choose to support.
That is why you want astute, strategic marketing. Therefore, show them why your company is worthy of the award. Help them realize why your service or product is a good investment and how it may give some stability during a difficult period.
3. Increase existing customer loyalty.
Don’t forget about your existing consumers. When all else fails, a devoted client base may be the only thing that keeps the lights on and the doors open. However, it’s a wise business decision to seek out new customers, but it’s just as critical (if not more so) to maintain the ones you currently have.
Most people say that acquiring a new client costs more than retaining an existing one. If you’re continuously bringing in new customers but losing your regulars, you’re moving one stride ahead and two steps back. You don’t want to be performing that dance.
Provide outstanding client service. Therefore, concentrate on fostering loyalty. Don’t save your discounts and gifts only for new consumers.
Continue to examine and determine their requirements and how you might meet them. Remind them of the benefits of sticking with you versus your competitors.
Takeaway: Don’t wait for a recession to prepare for one.
Begin preparing to give yourself a little added protection to help you live through the inevitable. The unavoidable may not occur today. Perhaps not tomorrow. Perhaps…well, you get the point.
This is not investment, tax, or financial advice. For counsel on your specific circumstances, you should seek the opinion of a qualified expert.