In the first quarter of the 2009 recession, the economy shrank 6.7%. People lost their jobs and businesses closed.
Fast-forward to 2020, the economy is nearing a recession. Businesses are closed and people are losing their jobs due to the COVID-19 pandemic. The future of the economy looks bleak, especially since people are required to stay home during the pandemic.
Although it's hard to tell if there will be a recession in the coming months, it's never too late to prepare your business. Now is the time to have a recession-proof business. Now is the time to be financially prepared.
If you want to thrive during a recession, here's a guide that can offer some ways to make sure your business thrives.
Make Sure You Have Cash Flow
If you want to have a recession-proof business, you need to have cash flow. It's how your business operates. It's how you maintain a profit.
There are two types of cash flows: cash in and cash out. You need cash in from customers who are buying your products. That's how your business profits because you need people buying what you're selling.
The other kind of cash flow is cash out. That means the money you receive from customers needs to go out and pay for rent, for utility bills, for software, taxes, and more.
Cash flow is important because you need positive cash flow to make a profit. Subtracting the cash in and the cash out can give you an idea of your profit margins.
Every business needs cash flow during the recession. That means finding a way to continue making from customers even when there is a recession. It means having a product that is valuable to customers during a recession.
You can also check out our blog on other tips on how to prepare your business for a recession with Google Ads.
Review Your Inventory
In order to prepare for a recession, you need to figure out what's in your inventory that you could do without in your business. Figure out how to bring down your inventory costs without giving up your product.
If you can reduce the cost of your inventory, you can bring in more positive cash flow. Finding ways to be strategic about where you get your supplies is important.
Are you finding the best supplies at the best price?
That's one way to have a better price. The goal is to save money so you have money aside during a recession. You want to increase your margins and not have it be razor-thin.
Another strategy when you decrease your inventory is to focus on your main product. Don't try to add more products that require more inventory. Instead, you should focus on your main product and use fewer supplies.
Do More Marketing
While most businesses cut back on marketing, it's actually important that you focus on doing more marketing.
Consumers are going to spend less money during a recession and you need to show that your product is a necessity. It's the most valuable item that they can have, more important than your competitors are offering.
It's an opportunity to step up your marketing game. That means having more blog articles and more advertisements that drive more traffic to your website. It means more targeted Facebook ads, Google Adwords, and Amazon marketing.
You need to market more wherever your audience is hanging out.
One strategy to consider when you do market during a recession is to consider family values into your marketing campaigns.
Family is more tight-knit during an economic recession. Individuals are home more instead of going out. They are trying to save money.
It's also important to focus on core values. Your marketing campaigns should focus on core values, and what people believe in most during hardship. It can help you create a value-centric campaign catered to for a specific audience.
Create Lifelong Customers
The most important customers are the most loyal customers. But how do you create loyal customers?
There are different ways to create a lifelong customer, a forever loyal customer. Communication is key. Provide extra perks when a customer signs up for the long-term instead of the short term. For instance, a reward system that gives back to customers when they continue to shop at your business.
One of the most important things you can do to create a lifelong customer is to consistently exceed their expectations. If you can create lifelong customers, they will never abandon your business, especially during a recession.
Identify the Challenges in Your Business
Every business has a weakness and challenges. It may be communication, payment processing, marketing, or something else.
You have to identify this weakness and figure out how to make it a strength. For instance, if your business has a great product but the communication is weak, customers will go elsewhere.
You also have to anticipate what challenges may arise during a recession or a pandemic. If your employees are working remotely, it's important to stay in communication to ensure that they meet the customer's needs.
If there is a recession caused by any number of reasons, you have to figure out how your business will overcome the challenge. It requires flexibility and mentally preparing for scenarios in which your business can still thrive.
Overall, these tips can help your business be successful during a recession. It can help you beat your competition, but it requires planning and budgeting.
Why You Need a Recession-Proof Business
A recession-proof business takes a financial strategy. You can't expect to make massive profits with massive profit margins. While that may be the case, you should plan to save every penny that you can. That's how you survive a recession.
You need to cut costs before a recession happens. You need to examine your cash flow and create lifelong customers. If you have lifelong customers, they will never leave your business because they will support you during a recession.
For more information on how to create a recession-proof business, contact us here.