A recession can be extremely damaging to a business—especially a newer small business—as it means that customers and clients may be spending less even as business costs are rising. Some financial experts believe the U.S. is likely to see a recession soon—others say it’s already here.
Although accurately predicting the onset of a recession may not be possible, business leaders can preemptively prepare for one by taking simple steps to ensure their business is stable enough to survive. Below, 16 Forbes Finance Council experts offer practical, actionable strategies leaders can use to help their businesses weather a recession.
1. Concentrate On Your Customers
During difficult economic times, the businesses that succeed are those that comprehend and satisfy their customers’ needs. This is not just about lowering prices; it’s also about improving customer service and providing more value for your customers’ money. Even during a recession, customers are willing to pay for this type of experience! – Neil Anders, Trusted Rate, Inc.
2. Keep An Open Line Of Communication With Clients
As business leaders think about a recession coming our way in 2023, so do the clients they serve. Among practical strategies that should be top of mind are ensuring cash inflow remains constant, increasing cash reserves and reducing expenses. Make sure you have a three- to six-month cash reserve for expenses. And importantly, companies should stay connected with their clients to make sure there is an open line of communication if things go wrong. – Nike Ajao, Spitfire Strategies
3. Improve Your Website’s SEO
Improving your website’s search engine optimization takes time and operates with a cumulative effect. If you’re not already investing in improving your SEO, you’re likely already behind your competitors. However, a recession provides an opportunity to gain ground or even surpass your competition should they pull back on their marketing and online presence. – Justin Goodbread, WealthSource Partners, LLC
4. Optimize Cash Flow
In a bull market, everyone prioritizes investment into revenue growth—growth that is often low-quality and will never yield cash flow. Heading into a recession, it is essential to optimize your business’ cash flow with the understanding that, in a recession, it will get worse before it gets better. – Jaclyn Foroughi, Brazen Impact
5. Help Team Members Boost Their Productivity
One key strategy is to focus on boosting efficiency and productivity. During tough economic times, businesses need to do more with less, and this often means finding ways to streamline operations and get the most out of employees. Also, concentrate on cash flow—this requires cautious expenditure management and early invoice payment. – Angelo Ciaramello, The Funded Trader
6. Let Your Employees Know You Value Them
From your sales team to your financial team, work to inspire all the members of your team to work together and be the best at their jobs so the company can not only survive, but find ways to thrive. Fear can kill productivity. Do actionable things to show you care, such as providing new, affordable benefits and resources that help alleviate fears and showing how much you value their work. – Renee Fry, Gentreo, Inc.
7. Seek Insights From Your Team Members
Secure financing if you need it, and turn to your employees for input. Covid taught us the value of maintaining staff and overhead during the most recent market downturn. Now that employees and overhead can be maintained, include your team in the next steps for the business. They may have a better pulse on the day-to-day operations, which can help you to stay as profitable as possible. – Loren Rojas, Northwestern Mutual
8. Check Your Cash Reserves
Make sure your business has sufficient cash reserves to withstand a decline in working capital as a result of an increase in the average age of accounts receivable. It’s imperative that you position yourself so that you can continue running your business according to your business plan throughout the cycle instead of having to start making business decisions based on available cash balances. – Sean Frank, Cloud Equity Group
9. Consolidate Tools And Services
Does your user experience team use Miro and your marketing team use Mural? Does your procurement team use DocuSign while your sales team uses HelloSign? Look for opportunities to consolidate tools across departments to optimize license use and cost, while improving cross-functional collaboration. You’ll save money and potentially boost productivity. – Michelle DeBella, JumpCloud
10. Be Prepared To Be Agile
Be realistic about where your business is and where it is going. The key is to be agile. That not only means planning, budgeting and forecasting into 2023 and beyond; it also means having a plan B and/or C and ensuring that your company’s senior team is aligned and you are prepared for whatever challenges you face. – Andrew Collis, Moneypenny
11. Focus On Execution
The leadership team needs to drive operational efficiency throughout the company—new sales leads need to be closed promptly with a focus on retaining existing customers and supporting their needs. Eliminate unnecessary or redundant expenses. Implement new customer contracts on a timely basis to drive cash receipts, which will enhance the company’s overall working capital position. – David Samuels, DrFirst, Inc.
12. Consult With Trusted Advisors On The Unique Impact To Your Business
Technically, we’re in a recession (two consecutive quarters of GDP decline). Business leaders should consider how the recession will impact their unique business. Macroeconomic indicators are only useful if you understand how they affect your operations. Once you do, you can make a plan to address the impact. Do this in consultation with advisors you trust. – Todd Sixt, Strait & Sound Wealth Management LLC
13. Focus On Your Priority Customer Segment
Company leaders should focus on keeping their priority customer segment top of mind and delivering excellent service, especially during the impending downturn. In rolling out new capabilities or choosing what to prioritize, keep your priority segment as your North Star and ensure you’re focusing on what these customers want and need. This is not the time to build superfluous features or products. – Eyal Lifshitz, BlueVine
14. Cultivate A Healthy Team Culture
A company’s most important asset, regardless of economic conditions, is its workforce. Employees who feel valued and connected to a company’s mission or purpose are more likely to stick around during tough times. It’s essential, then, to invest in cultivating a strong and healthy team culture. Compensation, transparency and employee empowerment are all great places to start. – Randell Leach, Beneficial State Bank
15. Tap Into Help From Business Assistance Organizations
Heading into a potential recession, it’s important to consider engaging an outside advisor to review your finances. Someone with a fresh perspective can help identify smart and useful ways to increase revenue or reduce expenses. Many nonprofit business assistance organizations—with a mission to help you thrive—offer financial advice free or at a low cost, making it easy to access. – Carolina Martinez, CAMEO
16. Look For Silver Linings
Do not miss the opportunity to be optimistic. There are deals to be made: For example, you can shop for discounted inventory or see if you can find a lower rate for some services, making a case for a strong ROI on some longer-term strategic initiatives. Think long-term, focus short-term and, most importantly, be agile. It doesn’t have to be a one-way street. – Vivek Sinha, Janus Advisory and Consulting Services