Farwah Jafri | February 14 2023
In the ever-volatile global economy, recessions remain a possibility. You cannot turn blind to the likelihood of an economic downturn and envision an ideal tomorrow. The best is to prepare for the worst and recession-proof your business before it is too late.
According to a McKinsey survey, 81% of CEOs think a recession is an imminent threat, and businesses need to be proactive to counter what is to come.
Even though the forces dictating economic downturns are beyond our control, it is possible to brace for failure and recession-proof your business. In this article, you’ll explore tips and tricks to keep your business afloat when the economy takes a nosedive.
Money is the cure for all business ills. Downturns and downtimes come, and the best you can do is to have reserves in hand. They give you a breather to get your business back on track and wait for the recession to subside if the worst comes to worst.
A trick to recession-proof your business is not to use business reserves as a piggy bank. Pay as you go and use profits to manage costs. Don’t pocket the profit or rely solely on reserves. Instead, build reserves and survive on profits by matching expenses with sales.
The attack is the best form of defense. Recessions bring with them lost business, and there is nothing much you can do about it. You cannot convince customers to stay when they cannot afford to avail of your services or buy your products. At such times, the best way to recession-proof your business is to attract new ones.
Marketing helps businesses grow, and can help you stretch your customer base, so you have new customers incoming no matter how slow the economy is. More so, it is a must to master how to deliver better value, as when the economic wheel comes to a halt, you need to advocate why your product or service is a must.
To learn how to make your business recession-proof, you must first master the art of customer retention. You can never retain every customer, but you must try to save every last one. A time-tested strategy is to improve customer service.
The more you work on customer satisfaction when the time is good, the better they will pay you back when the economy goes south. Trust goes a long way. Listen to your customer’s concerns, and they will come to your aid when the going gets tough.
Uncertainty is the #1 peril amidst economic downturns. You can never accurately predict how bad the situation could get and how long it will last. The best way forward is to be transparent with your suppliers and partners. Remember, they are in the same boat.
Transparency helps your business control uncertainties to some extent. Chances are recessions may cause some suppliers to tap out. So, you must know where they stand and share where you do. Open communication helps solve most problems and can help you and your suppliers ride their way into the sunset.
You can ill-afford to have the right guy part ways at the worst possible time. So, the best is to be transparent and prepare for tomorrow.
Being growth-focused is a positive trait. The outlook helps you scale effectively and take your business up a level. However, it is a must to know when to scale & invest and when to make do with what you have got.
Recession is often the worst time to open a new office, sign a new lease, or buy new equipment. The safest way is to utilize what you have and boost efficiency. Yes, if your business belongs to a niche like healthcare, where recessions have minimal impact, you must do what you must. For the rest, it is best to wait it out. That’s how you can make your business recession-proof!
Though it is hard to predict what lies ahead, the best you can do is plan for the best and prepare for the worst. There is nothing new you need to do to ride out recessions other than things you must do even when the economy is on its way up.
Most strategies, like boosting customer satisfaction, minimizing expenses, and being transparent, that work in upturns also prove effective in downturns.
Learn to prioritize business needs, and you can learn how to make your business recession-proof. Conversely, ignore the likelihood of a crash, and your business could go bust.
Luckily, now you know how to recession-proof your business. Take action today for a safer tomorrow.
Farwah is the Product Owner of Monily. She has an MBA from Alliance Manchester Business School, UK. She is passionate about helping businesses overcome challenges that hamper their growth, which is why she is working at Monily to facilitate entrepreneurs to efficiently manage business finances and stay focused on growth.