“The time to recession-proof your business is now. Once the economy starts to downturn, it may be too late to turn the ship and make the changes you need to so your business survives, and even thrives, in a worsening economy,” warns Belinda Rosenblum, CPA, and money strategist for entrepreneurs.
She points out that a recession is long overdue by many measures. And, according to the Capital One Small Business Growth Index (Fall 2019), 85% of small business owners say their business would be impacted if the economy entered a recession in the next six months, yet only 32% say they feel fully prepared for a potential recession.
So given that it is a matter of when— not if— a recession is coming, what are small business owners to do now?
Rosenblum encourages business owners to “uplevel” in the following key areas:
- Clarify your messaging
- Be sure you are attracting your ideal clients
- Monetize your expertise with a clear strategy and profitable business model
- Have financing in place for your business before you need it (from internal or external sources)
- Lead your team and entire business.
She observes that “when times are good, it is easy to let one or more of these areas slide. When times get leaner—and they will—you need to have each of these areas dialed in.”
Rosenblum is also host of “Recession Proof Your Business,” a free online event. She and other experts from the event share their best tips for keeping your cash flowing in any economy.
1. Take control of your cash flow
Belinda Rosenblum, CPA, founder of OwnYourMoney.com
“A surprisingly large number of business owners do not have a handle on their cash flow or even know their numbers. (It is no wonder that 82% of businesses fail because of cash flow issues, according to a study by U.S. Bank.) Make sure you know your numbers now and create a clear vision and profit plan for your future, including where your “lever points” are to push or pull back depending on the economic situation.”
2. Build multiple revenue streams
Jennifer Allwood, business coach and host of The Jennifer Allwood Show podcast
“One key way to recession-proof your business is to have multiple revenue streams. Having a variety of ways you are bringing in revenue at a wide range of price points is necessary to maintain your income regardless of the economy.
“Incorporating things like affiliate marketing, digital and physical products, a monthly/recurring membership group, one-on-one consulting, ad revenue, and sponsored content can really help your bottom line if the economy takes a downturn. You don’t want to be caught with all your eggs in one basket, unable to make a shift or pivot. Multiple revenue streams will help your business stay flexible and be able to persevere.”
3. Invest in your client relationships
Susan McVea, business sales strategist and host of Master the Sales Game podcast
“Invest in your client relationships! Focus on your best current customers instead of investing a large amount of money to attract new clients. When you create the best results and experience for your existing customer base, they will want to do more business with you and become an important source of new clients as well.