How to make sure your business survives a recession
For several months now, economists have been forecasting a recession starting in the early part of 2023. Most economists predict that this recession will be mild to moderate, largely due to the low unemployment rate, but that’s still up for debate.
If you own a business, you may be asking the $64,000 question: can my business remain successful during a recession? The answer is “yes”, you should begin planning for a recession, if you haven’t already begun, and learn some strategies to “recession-proof” your business.
The following are some strategic tasks to implement to give your business the best chance at surviving a recession:
- Cut or reduce unnecessary costs
- Build up your cash reserves
- Protect your cash flow
- Strengthen your existing customer base
- Provide support for the employees that you are keeping on the payroll
Be prepared for change
Many businesses find opportunities to weather a recession and actually have success during periods of economic downturn. The key is to have the flexibility to quickly adapt to the changing economy.
Here are some of other actions you can employ to make sure your business survives a recession:
- Look for available aids such as government assistance packages
- Focus on core competencies
- Be ready to take advantage for a bad situation with outside-the-box thinking
- Build relationships by networking and keeping the lines of communication open for any opportunities that may come your way
- Use technology to your advantage
And, while no business is “safe” when it comes to a recession, your chances of weathering an economic downturn also depend on what type of business you own. Some businesses that are more likely to survive include:
- Food and beverage
- Tax and accounting
Plan for success
The truth is that recessions are a natural element of a free market system, the nature of which means there will be periods of economic prosperity and periods of downturns.
Recessions can create uncertain times for businesses, especially small businesses, but surprisingly, they can also provide opportunities for growth and success. Don’t let the recession stop you from improving and growing your business.
Take the time to devise strategies to make your business more flexible and seek opportunities to stay in front of your customers by consistently posting on social media as well as holding sales and events to keep your brand front and center.
The key to surviving a recession is to have an understanding of critical economic concepts and take the necessary steps to safeguard your business. Consider enlisting the services of a CPA firm that provides accounting services for businesses to help you prepare for a recession economy.
At GYL CPAs and Advisors, we can help you put together a plan during trying economic times.