Recession Proof Your Business in 5 Easy Steps
Planning for a recession when you’re not in one might seem counter-intuitive but it’s best to be ready with the right tools and mindset for whatever lies ahead.
In this blog we’ve created a five-step plan to get you on track and equipped for any eventuality.
As we begin to emerge from the lockdown, businesses are now faced with the possibility of recession. The pandemic is something no-one planned for, but a recession is part of the cyclical economy we have. Every business needs a plan to come out the other side when times are tough.
We’ve seen a resurgence in the want, and need, to ‘shop local’ in the last year which has boosted small businesses, however often these are the most affected when it comes to a recession.
By creating a plan, even though you never know when you’ll need to deploy it, you stand the best chance of surviving, and even thriving, when it comes to harsher business climates.
Our step-by-step guide to recession-proofing your business.
Step 1 – Be on top of your finances:
This sounds pretty basic but, it’s important to get in the habit of checking in with your financials every day. The more often you do it, the less time it will take, and you’ll be on top of your financial situation.
If you don’t already have a Key Performance Indicator (KPI) system in place, it is well worth investing the time to create one. By understanding which practices or products generate the most return on investment and which expenses you can spare, you’ll know what’s really needed and what can be trimmed when necessary.
Once you’ve established your system, you’ll be able to start cutting the costs which aren’t adding to your profits. This way you’re setting up your business to not fail. The fewer financial burdens you have when a recession hits, the better.
Step 2 – Keep your operating costs to a minimum:
Think twice before you splash out on anything that isn’t totally needed for the running of your business. A new coffee machine or upgrading your printer might be feel exciting, but do you really need it? If you’re preparing for a recession, then it’s crucial for you to cut costs and keep discretionary spending to a minimum.
Obviously, it’s a balancing act and we aren’t telling you to halt all spending, just making sure you’re not overzealous with non-urgent expenditure.
Step 3 – Look after your credit score:
If you need a loan when recession hits, you want the confidence that you’ve got the best credit score possible.
Start to work on your score now to make sure you’ll be in the best position should you need to borrow to keep your business afloat. You should also consider your personal score as well, should you also need financial help outside your business.
Here are some easy ways to get a great score and keep it:
- Pay all your bills on time.
- Only use credit if you have no other option.
- Make sure any existing debts are minimal and well maintained.
- Check your accounts frequently for fraudulent activity.
You can check your credit score through agencies such as Experian here.
Step 4 – Get your marketing right:
In years gone by, the marketing budget was always the first to take the hit when financial difficulties were on the horizon but this can be a big mistake to make. Brand awareness when times are hard, can be the difference between sinking and swimming so it’s imperative you maintain your marketing plans.
Your clients and customers need to know you’re still there, operating and open for business. Don’t let them forget you.
Finally, make sure you are measuring the success of every campaign you run. Knowing what’s worked best will be critical when you’re up against it, and understanding the elements that you can forfeit will be helpful.
Step 5 – Keep your customers happy:
This is something that every business should always be striving for, but it’s even more important during and after a recession. By building up brand loyalty, you’ll have a customer base that’s faithful to your business.
Generating new business is great, but if we’re in a recession you’ll need your repeat customers. They’ll be your biggest sales tool too - never underestimate the power of a recommendation!
Some quick wins to make your customers feel valued and appreciated:
- After-sales care, look after your customers.
- Social media engagement, free and easy, albeit time-consuming.
- Special discounts for regulars.
- Look for trends and typical customer behaviours, start to understand who you’re selling to.
We hope that none of our clients are ever at the pointy end of a recession, but if you find yourself in that situation, we can help you every step of the way.
Accounting shouldn’t be unapproachable, and we’re certainly not.