Recession Proof Your Small Business

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Recession-Proof Your Small Business: Tips and Tricks for a Secure Future

Regardless of the current economic climate, it never hurts to be prepared for less than ideal times. When business owners are equipped with the tools and knowledge to survive an economic downturn and recession, they’re setting their companies up for success no matter what lies ahead. Here’s what small business owners should know about recession-proofing their companies.

Avoid Layoffs Whenever Possible

Layoffs due to financial strain can be one of the most difficult decisions a business owner has to make. However, there are ways to help prevent it. Look for ways to reduce expenses without having to resort to layoffs. Consider changes in working hours and salaries, or ask for voluntary leave from employees who may be willing to sacrifice in order to keep their jobs. Re-think operations strategies and outsourcing plans and consider applying for government grants, if they are available. There are many creative and smart ways to avoid layoffs during a recession, and it can be beneficial for businesses in the long run.

Find Ways to Limit Debt and Cut Expenses

Times of economic instability can be especially stressful and challenging for small business owners. To weather the storm during a recession, one of the best steps you can take is to cut costs and reduce debt. Start by creating a budget that realistically accounts for all expenses and identify areas where you can reduce or eliminate overhead costs. Try to pay off any outstanding debts and create a plan to help stay out of debt going forward. With careful planning and disciplined execution, you can ensure your business stays afloat even during a recession.

Consider Converting to an LLC

When preparing for a recession, one strategy that small business owners can consider is converting to an LLC. An LLC shields your personal assets from any legal or financial issues the business may face during hard times. It also comes with tax benefits, as profits and losses are only taxed once — at the individual level. Additionally, some states offer reduced filing fees and other incentives when you choose to start an LLC in California. Converting to an LLC can be a great way to protect yourself and your business during a recession.

Don’t Spread Yourself Too Thin

When a recession looms, it can be tempting to try and do everything at once in order to keep your business afloat. However, this approach is often counterintuitive, since it can lead to burnout or subpar performance due to a lack of focus and resources. Instead of trying to do too much too quickly, take time each day or week to hone in on one particular task or project—this way you’ll be able to produce better results without risking burnout down the line.

The same holds true for the services and products you offer. Randy Orr, CPA, CFE, CFF, Owner of Orr Forensic Accounting explains, “If you specialize in one product or service, you can create an invaluable reputation. Don’t spread yourself too thin—specialization will attract scarce dollars during a recession.” If you overextend yourself and your business, you could set yourself up for unhappy customers or a backlog of product that isn’t selling.

Update Your Marketing Campaigns

In order for your company’s message to reach more customers during a recession, it’s important that you update your marketing campaigns accordingly. This includes both online campaigns and traditional methods like print ads or television spots. Make sure all your content is fresh, relevant, and tailored toward potential customers who might be affected by the current economic situation. By doing so you’ll ensure that people know what services or products you offer that could help them during difficult financial times.  

Be Prepared so You can Succeed

Small business owners have plenty of options when it comes to preparing their companies for recessions. From keeping their best employees to cutting extra expenses to converting to an LLC, these tips will equip small businesses with the knowledge needed for survival no matter what lies ahead economically speaking.