The past several years have proved to be a bumpy ride for businesses across most sectors. From the COVID-19 pandemic and shutdowns to worker shortages, supply chain issues, and high energy prices, the challenges seem endless.
Now with a potential looming recession, the future continues to be uncertain. The good news is that there are a few ways to recession-proof your business so you can prepare for the ride ahead. Here’s a look at 6 steps to take.
#1: Update Your Financial Plan and Cash Flow Forecast.
If it’s been a while since you’ve reviewed these, now’s the time. Aim to build up any cash reserves and also cut back on unnecessary expenditures. If your company sustains a hit, doing this ahead of time can go a long way in helping you weather through difficult times, so you can survive in the long term.
Also make sure you know what your cash flow forecast looks like for the weeks ahead. Where is your incoming cash coming from, in what amounts, and where is it being spent? Knowing these figures now will help you to better understand where you need to adjust course.
#2: Imagine the Worst-Case Scenario – and the Best.
It sounds depressing, but thinking through a worst-case scenario and what the fallout would be can help you plan ahead to avoid them. But don’t just focus on the worst-case scenario. Also work through the best-case scenario and the most probable scenario.
With this kind of scenario planning, you’ll be able to imagine a few different short-term possibilities for your company’s future and then set it up for the most successful outcome. You’ll also have the data on hand to manage through each scenario, depending on which occurs, and respond quickly. This can help you to be more proactive in situations rather than reactive.
#3: Keep in Contact with Your Bank and Vendors.
Strong relationships are key when it comes to managing through difficult times. It’s why talking to your bank and your vendors is also an important step.
If you’ve noticed an issue with a particular vendor or are hearing rumblings of one, for instance, reach out and find out how the economic uncertainty is impacting them. It’s also a good time to review all your contracts to discuss potential financial liabilities and risks, as well as develop potential solutions. When you have a big picture understanding of your vendor partnerships, you’ll be able to plan for maintaining steady operations.
Likewise with your bank, stay informed about your accounts and loans. Have any been downgraded, are certain industries being more impacted, how secure is your sector, and what’s your business’s risk rating? Talking to your bank and having these conversations, now can help you to resolve them before they escalate or make a change if needed.
#4: Manage Your Customer Relationships.
Keeping up with good customer relationships is another vital way to manage through a recession. Since these are your source of income, you don’t want to lose any and you want to continue to expand sales.
If there are ways to strengthen relationships or attract new customers, look into these areas. Communicate with your customer base regularly, so you’re showing they are the top priority and continue to adapt products and services to best meet their needs.
#5: Focus on Your People.
When it comes to this recession-proofing your business, don’t forget about your team. Losing a key player right now could be disastrous. It’s why managing employee relationships is also critical.
Communicate with your people openly about the challenges potentially coming and what they company is doing to navigate through them. Also make sure they feel valued and appreciated, so they remain loyal. Now’s not the time to cut back on employee recognition. Instead, continue letting your staff know they are your most important asset, even if it’s simply through a thank you note or a quick word of recognition.
#6: Don’t Forget About the Competition.
When it comes to downturns in the market, not every company is going to make it through. To sharpen your edge against your competition, make sure you’re continuing with research and finding out where you’re outperforming your competitors and what your weaknesses are. You might need to implement new sales or marketing strategies, for instance, to gain a lead on your competition. Whatever the case, it’s best to determine this now before an economic recession arises. This way, you’re always one step ahead of the rest.
Get Help Enhancing Your Team.
Whether you need to hire full-time or access a steady stream of temporary workers to remain agile, turn to Murray Resources. As one of Houston’s top staffing agencies, we’re here for you with a team of recruiters who can help with a staffing strategy and a range of hiring services. We can keep company operations efficient and streamlined with the right people in the right roles. Contact us today to get started.