5 Tips to Recession Proof Your Business

EDITORIAL FEATURE 5 Tips to Recession Proof Your Business

BY FREDERICK CROSBY

There is heavy speculation about whether or not there will be a U.S. recession in the next year or two. While some indicators are pointing to a growing chance of a U.S. recession, the truth is that no one knows for sure exactly when the next one will happen.

Economic downturns are a fact of life when you’re running a business, but there are steps that you can take now to ensure your business is prepared to whether a storm and come out stronger.

Here are five tips to help recession-proof your business.

1. Focus on finances

Whether a business can set aside a year or three months’ worth of cash, it is crucial to create a fund that will mitigate risk during emergencies or provide options to capitalize on buying opportunities.

Keep close tabs on receivables, but remember that in a recession your customers may also be feeling the effects. Offering payment installments can go a long way toward helping customers get through tough times and increase consumer loyalty.

2. Examine your supply chain processes

Take a close look at your inventory practices.

Consider whether you are consistently ordering too much of a particular item. Are there suppliers that offer the same goods for less? Do any of your suppliers give discounts for bulk orders?

Don’t forget that more countries are entering the “tariff war” with the U.S. - there is a pending trade dispute between the U.S. and China, and there are more than $7.5M tariffs on exports from the European Union.

Businesses that find alternative solutions and adjust their supply chain network to avoid additional taxes and fees have an undoubtable advantage.

3. Stress test your business

A stress test is used to identify a business’ strengths, weaknesses, opportunities, and threats.

A stress test allows business owners to plan for worst-case scenarios and preview different crisis scenarios. This can in turn help you determine how your business would respond and create contingency plans to address vulnerabilities.

4. Customer first

This is an area where business owners cannot be caught complacent.

Get creative with strategies that attract interest, earn trust, and encourage loyalty. Look at what tactics your competitors are using and identify opportunities where you can do better.

Companies that excel in a recession are those that don’t sacrifice customer experience. Cost-cutting solutions that look good on paper do not always translate to real-time success. If it drives customers away, pivot your planning to accommodate your base.

Take steps to improve your customer experience before a recession by analyzing customer behavior data. Customer insights will help owners understand wants and needs, buying habits, and how to better serve them. These insights are a business owner’s Holy Grail for attracting and retaining customers before, during, and after an economic crisis.

5. Don’t neglect marketing

An economic slowdown is an opportunity to distinguish your business from competitors. Highlight how your products or services are superior or unique with marketing strategies that don’t break the bank. There are many cost-effective ways to get your message out, including social media and training employees to be brand ambassadors.

While cutting marketing costs may ease your budget in the short-term, it has the potential to hurt lead generation and brand awareness.

The threat of a recession has been a prominent discussion in the media over the past few months. The secret to weathering an economic storm is proactivity.

Preparing ahead of time will set up your business to not only survive an economic crisis, but emerge even stronger and more successful.

Frederick Crosby is the Chief Revenue Officer of Veem, the global payments network built for business. To contact Veem please visit https://www.veem.com/