Business owners can predict whether a recession is going to occur, however it’s possible to control whether it happens. Therefore, the best ways to deal with the recession is to prepare far enough in advance. To help prepare, consider the following 6 action items SMBs can take to minimize the impact of a recession.
The first thing businesses should do right now is to build a cash fund. If a recession starts, cash is going to be their lifesaver. Businesses should set aside funds worth six months of operations to stay afloat. A cash reserve is the best way to protect yourself during bad times. A simple way to succeed in tough times is to set up a cash income stream. If you optimize your cash flows, the recession won’t have as much of an impact. You can rent out your office space, equipment or assets to earn monthly rent. This will ensure that you stay afloat during a slump.
Shannon Steinberg, CEO of Allied
Business owners should use predictive analytics to forecast future trends. This way, they can plan ahead of time. Hence, business owners can stock raw materials according to consumer demand. They can also connect with local suppliers. It can help overcome supply chain problems in the inevitable economic downturn.
Forecasting the future trends can help not only survive but succeed in recession. That’s because people will have needs they would want to fulfill. This means businesses can thrive by offering products and services at affordable prices. So, rethink your business plan for a more cost-effective strategy.
Perry Zheng, CEO & Founder of Cash Flow Marketplace
One cannot stress enough how business owners should cut down on all unnecessary expenses. They must save that money instead to stay afloat during an economic crisis. With an impending risk of a recession, now is the right time to save. You can do this by not hiring more employees and letting go of some existing ones. This will reduce labor costs and training expenses.
Jamie Penney, Founder of Thebackyardpros
Diversification is a great way for business owners to succeed during a recession. This diversity is not just limited to your investment portfolio but extends to your customers. A more segmented customer base means there will always be someone willing to buy from you. So, you won’t have to worry about closing down your business due to a lack of sales during an economic downturn.
Joseph Counts, CEO of HiStylePicks
Recession is a vice that businesses need to prepare for if they want sustainable growth. Companies should explore funding options. I recommend opting for SBA CAPLines. This loan is available to small businesses to help curb the risk of recession.
SBA also offers a secure line of credit. The purpose of such a loan is to meet the venture’s short-term needs for cash. SBA provides backing for the line of credit, making the loan less risky for traditional lenders.
Greg Rozdeba, President of Dundas Life
People can succeed as business owners during the recession by establishing flexible client agreements. It can help create a connection with your lenders. You can offer rewards to suppliers for timely deliveries. This would ensure that you always have the stock to serve your customers. When you’re flexible, it can help attract local vendors.
Andrew Johnson, Founcer of Prime Seamless
Recessions are beyond your control. However, following the above expert tips , you can get prepared for and get through them unscathed. In a nut shell, create an emergency savings account, hold on tight to your investments, reduce your debt and wait to make large purchases until after the recession ends.