If you have been watching the news at all, among the top conversations among the latest COVID variant is talk of an impending recession.
Please listen carefully, “Prepare, Don't Panic” I repeat, “DO NOT PANIC”.
And by “prepare”, I am not talking about stuffing dollars under your mattress. As a geriatric millennial, this will be the third recession I have faced, so I feel like I have a trick or two up my sleeve to share with you. Here are a few helpful tips to help you properly prepare for a possible recession.
There is no better time than now to review your operational efficiencies. Now would be the time to finally take a closer look at areas of opportunity in your business that you have not quite gotten to.
For example: If you are a restaurateur and your operating hours are from 8am but your first sale is not until after 9am, consider opening at 9am. Perhaps if you are a hotel and your housekeeping staff spends 55 minutes cleaning a room, there might be a way to get it to 45 minutes by evaluating your procedures. Maybe your sales team is spending too many hours in meetings and not enough hours “Smiling and dialing”
Tighten the belt, but dont starve yourself. I see too often, companies restrict their spending so much they are unable to continue to grow or continue on the trajectory they were heading, essentially they quit fueling their own fire. Smartly, continue your efforts to build your revenue streams. Avoid over correcting
Speaking of revenue streams, it’s time to get creative again! Are there other areas of the business to monetize, increase current revenue, or add another revenue stream? Consider all pieces of your business: Are you charging for parking? Are you absorbing costs for customers and not including that in your pricing model? Have you not raised prices in 20 years? Is there a piece of your business, like a special service that clients have been asking for? I like to think of where we might be telling our customers no and shift to a “Yes, and for X price” mindset.
Review your contracts and terms of agreements for both your own customers and your vendors. Some ideas might include things like you are working with a social media specialist for an hourly fee and can negotiate a flat project fee so you can predict expenditures a little better. If customers contracts have cancellation policies I would review those and touch base with customers to make sure they are not changing plans. Be flexible but firm.
Cash is King! If you are not already BFFs with your Quickbooks account, bookkeeper, and accountant, you will definitely want to make that a priority. (Did you read my blog about this?) You should be reviewing your cash flow and forecasting for the short and long term. Have a conversation about where you are spending the most and you can work through a plan to spend frugally. This would also be a smart time to hoard some savings. Talk about some potential loans that could help keep business running for a longer period of time. Go back and collect outstanding balances. Negotiate your payback terms to your vendors.
The biggest piece of advice I can give you is to refrain from the panic that feels so easy to fall into right now. I understand the fear that comes from an impending recession, but businesses survive and thrive during all of the ebbs and flows of an economy and there is no reason yours can’t be a part of those that do.
When you can keep your head on straight, get creative, and remember that the reason you got into business in the first place was to help people I know that you can make it through and I can’t wait to watch your business thrive!