A recession is a period of declining economic performance across the entire economy, which must last for at least several months. Inflation has accelerated to nearly 8.6%.
Nearly 70% of economists surveyed recently believe that a recession will take place at some point in 2023, with 38% predicting that the recession will start during the first two quarters of the year.
This can severely impact not only levels of bankruptcy and unemployment rates, but it can also result in diminished demand from consumers and businesses. Therefore, small business owners may experience an incredible impact from such an economic downturn. So how can you recession proof your business to set yourself up for the long haul?
In order to recession proof your business, you need to look at three different aspects: things you want to prepare, things you want to change, and ways that you want to expand and grow.
Building Safety in 6 Steps
1. Be Safe Financially
First, you must calculate your cost of doing business; click here to access a free spreadsheet to calculate this.
Next, make sure that you’re building up your business credit. Before a recession happens, you want to ensure that you have a plan for business credit should you need to access it.
I would advise against utilizing a high amount of business credit, and instead build it by taking out a line of credit that you can pay off in full right away. Over time, this will allow you to build up your business credit — and if you need to utilize it in the future — it has already been established.
2. Maintain Client Relationships
Next, make sure that you take time to maintain client relationships. Anyone that you already have as a customer, client, or a contact within your business, make sure that you are maintaining strong relationships, and that you are still a reliable source for their product, service, or information. Take time to build a level of client trust, but also ensure you are reaching out and forming new connections.
Be sure that you’re maintaining platforms such as your mailing list and social media platforms so that information can be passed easily and efficiently across your client list.
3. Pivot Your Target Client + Product or Service
First, you may need to change the idea of who your target client is. This could be either a small change in terms of niching down and reaching a more specific target client, or it could be a larger pivot such as reaching groups that are known to be recession proof — this could include individuals working for the state, local, or federal government agencies, and even groups of clients you know will be less affected by a recession.
Identifying this shift in exactly who your new target client is can help you identify how you should reach them and how to adjust your marketing accordingly.
Also consider changing your product or service offerings in order to be an essential need that will not go away with a recession.
4. Review Your Expenses and Create a New Marketing Plan
Make sure you are cutting your expenses. It can be incredibly valuable to calculate your cost of doing business, review your financial records, and see exactly where all of your business dollars are going. In many cases, there are different ways you can adjust your overhead costs in order to be more efficient.
The third piece of the puzzle here is learning ways to expand your business with a recession in mind. Firstly, increase your marketing — just because there is an economic downturn does not mean that you should stop your marketing.
However, you do need to pivot who you’re marketing to and the methods you are utilizing. Despite the need to cut costs to ensure you are efficiently spending your businesses money, pulling your marketing budget is going to have an adverse effect. Instead of pulling your marketing budget, you may want to consider adding a higher marketing budget or retargeting your advertising strategy.
5. Expand Your Business to Reach New Clients
Bring your products and your services online if you are a service based business. If you are an in person based business, you’ll need to invest a significant amount of time to ensure you can make money not only in person, but also online. This can include listing products online, creating and listing digital products, and conducting services virtually.
Next, when poorly run businesses go under and the market competition bins out, fill the gap. Look for areas of opportunity during this time and try to be among the first to fill those opportunity gaps.
6. Create Multiple Streams of Income
Lastly, develop multiple streams of income within your business. Diversifying the way that your business earns money is an essential pivot for surviving a recession. There’s a variety of different ways that you can create new streams of income within your current business, which includes things like creating a YouTube channel, selling digital products, as well as creating courses.
Want to learn more about how to create passive income? Watch the video here!
