The possibility of a recession looms over businesses, threatening profits and inspiring fear. It can certainly be tempting to submit to the anxiety and worry about the future, but there are a few ways you can transition to become a recession-proof company. With the right mindset and a solid business plan, you can learn from other recession-proof companies and achieve the stability you need to weather any economic storm.
1. Evaluate the Health of Your Business
To prepare for a recession, you must first evaluate the overall health of your business. Look at your incoming revenue versus your outgoing expenses, and ask yourself the tough questions — what kind of returns on assets are you seeing? Is your daily cash flow at a sustainable level? As you answer these questions, consider how a recession may impact the figures.
Debt is another important metric of your business’s health. If a recession occurs, interest rates may fall, but this doesn’t mean taking out a loan is a good idea. On the contrary, debt can be crippling to small businesses, especially when a recession places undue strain on operations. One of the fastest ways to improve your company’s financial standing is to pay off debt as quickly as possible.
2. Take Action & Make Changes to Your Business
Paying off debt isn’t the only change you need to make if you want to join the league of recession-proof companies. You will probably also need to make some changes to the structure of your business, including cultivating new revenue streams. Indeed, this is the characteristic that defines most recession-resistant businesses — multiple sources of income. Branching out your business will help you achieve this.
As you make these changes, you must do so with a clear strategy. Think about what kind of products and services you need, no matter what’s going on with the economy — and think of how your business can stake a claim in this area. For example, if you’re a small business providing catering, you may find that a recession reduces your revenue because there are fewer special events. The need for food and beverage never disappears, so you can pivot to providing your services in another sector.
3. Maximize Your Team’s Talents
Recession-proof companies know that their team is the most valuable asset. This is especially true if you’ve recruited a staff that contains talented and versatile professionals. As you work to cultivate a recession-resistant business model, versatility is imperative for team members. You need employees whose talents are transferable and whose skills are multifaceted.
To leverage the full potential of these team members, you should consider the various ways they may apply their skill set. If you employ a talented marketing manager, for example — but the recession lessens the need for marketing campaigns — their skills may also be valuable for social media development. Your team’s versatility is your best weapon against the threat of a recession.
4. Meet Your Employees Needs
If you expect your employees to be flexible in the face of a recession, you must do your part and provide them with the necessary resources. Meeting the needs of your employees isn’t just an investment in them — it’s an investment in your business, too. When your team is taken care of, they’ll be ready to take on any challenge the economy might throw your way.
It’s also important to be mindful of the impact a recession may have on your employees as individuals. As you’re building a recession-proof company, remember that people often can’t create the same resilience in their own lives. A recession can cause financial stress and instability. By offering fair wages and benefits, you can ensure that your employees are recession-proof along with your business.
5. Plan for Recession Possible Outcomes
Even if you’ve managed to succeed in your goal and cultivate a business that’s unaffected by a recession, you need to be ready for the more significant impact that such an economic event may have. Your competitors might launch an aggressive marketing campaign as they try to recoup lost profits, for example, and your clientele might shift their spending to more affordable products and services.
Some potentially positive outcomes may follow a recession. As the economy bounces back, many consumers will be eager to buy with confidence again, and you might see sales increase. Similarly, your business’s ability to adapt — and your employees’ flexible skills — will prove to be beneficial regardless of the state of the economy.
Make your business more robust than ever by developing a recession-proof strategy. You can withstand instability with a solid team of employees and multiple income streams.