The economy is slowing down, and interest rates are going up. Is your business ready for what is going on in the marketplace? With the current stock market volatility and former Fed Chair Janet Yellen doing numerous interviews about the recession that’s on the way, it’s time to get ready. No one will forget the recession we suffered more that a decade ago. Small businesses were hit hard, and we didn’t get a bailout. In fact, more than 200,000 small businesses shuttered during the Great Recession of 2008. This post focuses on how to take measures now to recession-proof your small business.
7 Ways to Recession-Proof Your Small Business
1. Focus on Your Sales Process
Right now, business might be good for you. Even if you’ve got more work than you can handle, make marketing and sales a priority. Make sure you are driving new leads daily and take time to follow up on your leads. Set aside two hours a day for sales activities or two half-days a week. Ongoing sales are the single most important component of small business success, and one of the best ways to recession-proof your small business.
2. Watch Your Finances
It’s always a good idea to trim expenses where you can, regardless of the financial forecast. Every quarter or so, look at your line items for your expenses and determine which are unnecessary. Especially watch subscription services. If you have used a cable company for your phone and internet for years, it might be time to cancel it and rely on your cellphone, Zoom or Skype for business calls. Nextiva is a VOIP service that will give you everything you need for your business.
3. Get a Finance Strategy in Place
One way to recession-proof your small business is to borrow money before you need it. If you need a line of credit, request it now. Put yourself in a position to run your business for six months without any new business. For any new contracts, make sure you know when you will get paid. Move to electronic payments if possible. If you regularly have customers who pay you late, now is the time to re-enforce your payment policy. If you want to be paid within 15-to-30 days, communicate it to all customers. Reward customers with a small discount for paying early. By the way, paying net 30 is not worthy of a discount—customers are supposed to pay you within 30 days.
4. Stay on Top of Your Sales Team
If you set sales goals each year, review them monthly. Use customer relationship management (CRM) software to track communication with your sales targets. Have weekly accountability meetings with your salespeople and demand reports on activity. If your salespeople are not producing new business, evaluate their status every three months. What trade shows will you attend to make connections? Things in your business may change, and you’ll need to ensure that your sales activities reflect those changes. Put it on your calendar to review your sales and margins monthly and amend the sales goal if necessary. What additional action do you need to take to close on your sales numbers? Does your sales team need training? Do you need a new product or service offering or value proposition?
5. Pay Attention to the Marketplace
Staying on top of your industry is a great way to recession-proof your small business. If you hear that your main contact is retiring or about to start layoffs or a merger, consider how this will affect your business. A slowdown in sales could become a trend; it’s time to analyze your industry and your costs so that you can make sure that you are partnering with your customers and anticipating their needs. You can mitigate the risk your business takes if you are proactive about it.
6. Stay Close to Your Customers
Talk to your customers. If you know your customers well, you’ll know if they’re about to take their business elsewhere, and you can do something about it. If a client you have had for years, recently reduced the number of products she buys from you, make a call. This might be nothing, but it’s enough of a signal that you should find out what’s going on. If she doesn’t have enough expendable cash to keep up her orders, offer her credit terms to stay loyal if you can. Always be willing to brainstorm with a client. Ask if there’s any other way you can help keep her business.
7. Over Deliver Value
This is the time for you to shine for your customers. You won’t win a price war in your niche, so focus on doing a great job and adding value. If your customers know you consistently perform or provide quality products or services, they’ll keep coming back. Just continue to deliver those high standards, throw in some extras, and your business should weather any storm.
If you do just a few of these suggestions, you will position your business to thrive during the next economic turndown. No matter what is happening, you want to be watching your cash position, bringing in sales leads, and staying in touch with existing customers, so you don’t struggle to stay afloat and keep employees when times get tight. Planning now will save the day later and is the key way to recession-proof your small business. Good luck!