As if business owners didn’t have enough to worry about, there’s news of a brewing recession on the horizon too.
At this point, it’s best to leave the debates to the economists. After all, recessions do happen whether we like it or not.
Thus, it’s best to prepare as if a downturn is coming your way.
Here are six precautionary measures from founders and business leaders who’ve been through an economic slump and survived it.
Listen to Your Employees and Customers
Yes, you read that right.
Aside from economists, your clients and employees can provide you with data that would help you gauge the market’s current conditions.
Regularly communicating with your customers and asking the right questions will give you real-time insights as to where things are headed.
For instance, you can converse with some of your customers about what they’re seeing in their business or if they’re having problems with the inflation of the housing market. Keeping a finger on the pulse of the local economic conditions will better inform your future expectations and plans.
Recessions are part of any economy’s cycle and while you cannot stop them, you can definitely give yourself enough time to prepare for the worst.
Use the Pandemic as a Case Study
The last economic recession was the 2008 financial crisis. Hence, new entrepreneurs and founders don’t have first-hand experience of what it’s like.
However, the pandemic should be an even better proxy to help you understand the big picture.
Imagine closures, supply chain disruptions, and staffing shortages. Yes, exactly just like what happened during the pandemic. These, among others, are what you might need to deal with (albeit admittedly on a smaller scale) in case there’s a recession.
Hence, before it happens, learn to embrace conservative accounting and prioritise profit over growth. Track and minimise your expenditures to maximise your resources, so you’ll have a safety net when things go wrong.
Make Layoffs Your Last Resort
As much as possible, don’t rush layoffs. While it may seem like a good idea at the moment, getting your staff back when you do need them is more difficult.
In fact, companies that made major staffing cuts found it difficult to recruit their former employees again. Many went on to find better jobs or moved on to other industries.
As a result, they had to hire and train new employees all over again.
Defer Funding If You Don’t Need It
It’s tempting to raise or borrow money especially if a recession is coming or happening.
Word of advice: Don’t.
Experts recommend that entrepreneurs take whatever necessary steps they can to stabilise their financial resources -until conditions improve.
Again, a recession affects everyone, so it’s the absolute worst time to go around asking for funding.
Find Ways to Make Your Products Essential
Customers will make budget cuts during any downturn. Hence, founders and business owners are advised to find ways to make their products and services essential.
This can mean changing your product or adding a new line of offerings. Either way, you need to act quickly. Customers deem products and services essential (and indispensable) when these can solve their new problems as well as the old ones.
Stay Enterprising
While it may seem scary, experts agree that we should approach recession like any disruption.
This means focusing on what we can control and finding new ways to provide value to our clients, employees, and other stakeholders.
At the end of the day, challenges provide opportunities. So take this time to explore new revenue streams or even start new business lines.
Need help in navigating all of these? We’ve got you!
Remote Staff has been assisting Aussie entrepreneurs and business owners like you for the last 15 years and counting with the help of our talented remote workers from the Philippines. Aside from finding and hiring the right people, we also provide training to help you build a team that can help you sustain competitive and resilient business.
Call us today or schedule a call back and let’s get started.
Serena has been working remotely and writing content for the better part of the last decade. To date, she's written for Pepper.ph and Mabuhay Magazine, among others, and has churned out more than a thousand articles on everything from The Basics of Stock Market Investing to How to Make Milk Tea-Flavored Taho at home.
