How To Survive The Recession Business – There are plenty of words or phrases that will immediately terrify, sweat, and shudder for small business owners. Unpaid invoice. Nightmare customers. Customer complaints.
Unfortunately, that’s what a lot of entrepreneurs (and people in general) think about right now. The World Bank’s latest report predicts that we will see global growth slow from 5.7% in 2021 to 2.9% in 2022. Bloomberg Economics says there’s a 72% chance recession before the first quarter of 2024.
How To Survive The Recession Business
Sorry. But don’t start gasping and shoveling into a paper bag — it’s not all doom and gloom. Many economists insist that we will see a slowdown or recession, but not an abrupt halt to the global economy.
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“Most of the companies I serve will notice that and will be forced to tighten their belts, but won’t be forced to go out of business because of it,” said David C. Baker, President of Recourses, Inc. , who works with independent companies, explains in the marketing space.
Even so, the possibility of an economic downturn—whether mild or sudden—is something business owners want to be prepared for.
But how can you prepare your business for that impact, whatever it may be? If you’re worried about how to survive a recession, here are 10 smart steps to take.
Even if you want to cover your ears, bury your head in the sand, and pretend everything is okay, ignorance is not necessarily happiness in this case.
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“I didn’t really pay much attention to the economy in the 2000s, which was a mistake,” says Michelle Garrett, a public relations consultant who founded her company in 1999 and tells us. has since weathered two recessions or recessions.
“The 2008-2009 recession was long and impactful—and it affected me in a way I can’t describe, except to say I would never allow that to happen to the public. my business too,” she continued.
“I’ve been forced to take on projects and clients that I wouldn’t otherwise have taken on to build my business’s books after the losses brought by the economic downturn.”
However, the experience has taught Garrett a valuable lesson: “I think as a business owner it’s important to remember that you always need to be prepared and be mindful of possible economic conditions. affect her business,” she said.
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That vigilance helped her as the economy began to slide in the early days of the pandemic. As soon as she saw the early warning signs, she prepared by building her client list as much as she could.
Result? Her business hasn’t been negatively impacted—in fact, she had one of her best months ever in April 2020.
If you’re wondering how to survive a recession, the word “survival” is an important word. In tough times, you probably won’t grow (unless you’re really, really lucky). More than anything, you’re in maintenance mode.
This may not happen when you will be doing a lot of experimentation or pursuing an ambitious business idea. You probably won’t rush into hiring or retiring easily with financial security. You may not see record revenue or close one deal after another.
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Always aim for the end goal: Get through the downturn with your business intact. If you can stay afloat and pay your bills on time, you’re winning.
Have you noticed that you’re starting to lose some of your current or existing customers—even long-time ones? Have you had to dip into cash savings to cover your expenses?
It’s tempting to tell yourself that you don’t want to jump guns. Maybe you should wait a few more months and see if things settle on their own.
In fact, you want to “act fast” when you notice your business is slowing down, Baker warns.
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Whether that means cutting costs (including labor costs, which are always painful) or building more emergency reserves, you want to weather a potential recession as much as possible. Good.
Also, it may seem counter-intuitive, but those quick decisions can actually be easier on your employees. “It’s much better to cut a large amount of the workforce than a series of small cuts, which would be like cutting someone’s leg off inch by inch,” Baker added.
Did your grandma tell you to save up for a rainy day? Turns out, that advice still holds true (thanks, ma’am). One of the best ways to prepare for tough economic times is to store some cash when things are going well.
While you still want to prioritize your mental health and avoid burnout or overwork, Garrett says she tries to “weed when the sun is shining” and work as much as she can when the job is done. business is booming.
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She adds: “Save your money for times when your business might be on a downward spiral. That emergency reserve is invaluable for staying afloat when things start to change.
Of course, preparing for a possible recession is not just about saving, but austerity when possible. Are there any costs that you can cut completely or significantly reduce?
It’s by no means an exhaustive list, but it should be enough to get you started looking for ways to cut costs and offload at least a bit.
Conventional wisdom will tell you to focus on paying off your debt before the recession. In some ways, it makes sense to remove that huge burden.
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However, Baker suggests a different approach. He thinks it would be smarter to keep making minimum payments on existing debts.
It allows you to preserve cash and keep it liquid for any tough times to come. Plus, you can take advantage of a lower interest rate when you take on the debt.
With that said, Baker says it’s best to avoid taking on new debt as well. Digging that hole only covers up the tough decisions you’ll likely need to make in the end. As Baker puts it, it “allows you to glue paper to a leak in the ceiling.”
If you really need to take on any debt, Baker says it should be to gain market share, not to cover your operating expenses.
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When you notice things are going horribly wrong in your business, that might be the moment you decide to hit the sidewalk, slip into people’s inboxes, and aggressively pursue the business. new.
Not only is that frantic scramble stressful for you, but it can also seem dishonest (and maybe even frenetic) to others.
A better strategy is to always prioritize marketing and networking. “Don’t be silent, even if you’re busy with a client’s business,” says Garrett. “Always talk to people, meet people (yes, online too) and keep your channel full.”
Employee retention is another pressing issue for business owners who are weathering a wave of recession. How can they inspire their best employees to stick with the business when the business is in trouble and they may not have the financial resources?
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Baker says offering bonuses rather than permanent raises for the time being, as they are often more reasonable in the long run.
Also, think of some other cost-effective perks you can offer. For example, you can give employees more control over their working hours.
This isn’t possible for every business, but when 95% of employees globally say they want flexible schedules, it’s definitely a compelling perk for your employees.
While this may not be the time to invest heavily in brand-new business ventures, it’s a good idea to experiment with some creative ideas with your existing products and services.
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“I’m going to start offering monthly packages and memberships,” explains Kelli Sager, a licensed massage and craniosacral therapist who owns a studio in Maine. “I would also go back to giving slip rates for craniosacral sessions.”
She hopes those steps will help make massage more affordable and accessible for her clients, especially at a time when people tend to cut discretionary spending and stop Prioritize self-care.
You can follow. Think about new ways you can package, present, or tailor your products and services to make them more appealing to your customers or even more cost-effective for you.
Recessions are scary, and “stay optimistic” can seem like cliché when you feel your business may be on the verge of collapse.
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But do your best to stay calm and confident. “I try to remind myself that I have enough right now and I always manage to figure it out, even when times are incredibly difficult,” says Sager.
And while a recession may look like the end of the road, Baker says there’s still room for optimism. “A recession, if it happens, will eliminate weaker competition,” he concluded. “This is the time for a stable, forward-looking leadership stance.”
Kat is a freelance writer focused on our working world. When she’s not at her computer, you’ll find her spending time with her family—including her two adorable boys and two rebellious mutant dogs.
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