A potential recession is looming and business owners are scared. Times are tough for entrepreneurs and most of you are not prepared for the hard times ahead. Even if you are not prepared, it is not too late to take some steps towards being prepared for a near future crisis. Even better, I believe you can come out of the recession stronger than ever.
As a small business owner, shift your perspective regarding recessions. During times of economic disruption, you can reposition your small business for greater growth. It is easy to become complacent in your work as an entrepreneur. When your business faces an economic crisis, you will be forced to evaluate your market and look for new ways to grow your business. Some businesses will choose to push through and many will succeed and generate more revenue than ever before. Others will choose to close their doors. Despite your fears right now, I hope you start looking for the silver lining in the recession and use this time to create an increase in revenue and profit. As a matter of fact, there are steps you can take in the next 30 days to set your business up for success during the recession.
Recession Proof Your Business! Listen to the episode here.
Protect Your Cash Flow to Prepare for a Recession
Cash is the fuel that your business will require to operate. Managing your finances is crucial to your success. However, this is the most neglected area of small businesses. Most small business owners are operating their businesses from one checking account. It is common for owners to deplete their business checking account every month on expenses and payroll. Your cash flow is going to be your biggest asset during this time. Before you do anything else, evaluate the health of your business finances. Make sure you have 3-6 months of business expenses tucked away.
As a business coach, I recommend operating your business from five checking accounts. As a business owner it is important to reward and protect yourself with your business finances. I recommend taking this training right away, Small Business Cash Flow Made Simple at Business Made Simple University.
Your Profitable Assets Will Protect Your Business During a Recession
Business owners have a tendency to react to economic downturns negatively out of fear. It is not uncommon to see companies layoff valuable employees or start cutting corners on their most profitable products. People and products are the biggest expenses the company has. The problem is, cutting your staff or products may impact the customers journey, resulting in a loss of sales and bad reviews. It is time to conduct an audit to discover where you are driving the most revenue and maximize on these people, products and services.
Now is a great time to tighten up every employee’s job description and gain a clear picture of why they are needed. Also ask yourself what duties you will take on if you do not have this team member? It is possible that you will discover you have more staff than you need. Every employee should be adding value to the company.
Your products and services must be in demand and profitable as well. Be sure to complete an audit of every product or service you currently sell. In regards to your products, ask yourself the following questions:
- Describe the product or service.
- How much revenue have you generated on this product or service this year?
- How much did it cost you to create this product or service? Include payroll costs.
- What kind of resources or supplies are required to maintain this product or service?
Place your sales efforts on the most profitable and in-demand products or services. Do not cut corners on production or delivery. This will weaken the customer experience and cause a slow decline in sales and reviews. Instead, cut back on spending time, money and resources on the products and services that are not profitable.
Enhance Your Customer Journey
Your customers will remember their experience when they do business with you. Some will even leave a review sharing their experience. Making an impact on your customers and building a relationship with them will be more important now than ever before. Basically make the customer’s experience with you memorable. Here are a few things you can add to your customers journey to ensure they tell others about you.
- Increase value touchpoint: emails, blogs, educational videos.
- Encourage a referral system
- Send thank you cards
As the market changes, so will your customers’ needs. Make sure you are in-tune with what your customer needs most right now. It may be time to re-evaluate your company’s mission and your marketing message. Reaching your target market and meeting their needs is crucial if you desire to keep your doors open. If you need help identifying areas of your business that need improvement, complete this FREE business assessment and we will make recommendations on training and tools that will help you serve your customers with top notch customer service.
Be Ready to Pivot and Change Your Business Plan
When the COVID-19 pandemic hit in 2020, many business owners closed their doors. They were not prepared to pivot and go where the market was going. In other news, many businesses actually made more money than they had ever made before. Check out how Olive Garden and Chipotle dominated the restaurant space during the pandemic
“The pandemic caused a lot of small independents to go out of business,” said Joe Pawlak, managing principal at Technomic. They “didn’t have the financial wherewithal [or] sophistication to make it through.”
This is the art of the pivot. These companies are now in a position of strength, poised to fill the gap left by restaurants that didn’t survive. Now is not the time to battle for your comfort zone. Instead, discover what your customers need from you and make it happen. This is not the first recession, and it will not be the last.
“As sure as the spring will follow winter, prosperity and economic growth will follow recession” – Bo Bennett
At Jump Start Business Builders we give entrepreneurs the tools to grow a profitable business through coaching and courses. With our 6-part framework, you can optimize your business for revenue and growth, even during a recession.
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