For years, we’ve been hearing that another recession is on its way. As the economy ebbs and flows, business owners can be forced into precarious positions that may threaten not only their livelihoods, but the livelihoods of their team members as well. But there are ways you can start preparing for the next recession now, so that you don’t get caught unaware when it occurs.
Why start preparing for a recession now?
In order to maintain your company’s ongoing growth and expansion, you need to have a plan for tackling the next recession without missing a beat. In the business world, we’re all aware of how economic cycles can impact us. No matter what industry we’re in, we know another recession will affect us, whether it’s right around the corner or years away. That’s why successful business owners always plan ahead.
But planning for a recession can provide flexibility in other areas. When the winds start to change, the strategies we use to prepare for the worst can help adapt to changing conditions, like shifting consumer tastes or online purchasing trends. A good plan can even prevent governmental or regulatory changes from damaging our business.
How can I become recession-resistant?
Like a ship in a storm, there are ways to weather the worst business conditions and come out ahead. You can build or redesign your business to be more flexible and diverse, taking advantage of multiple audiences and demographics to provide a variety of fallback plans. Staying nimble can also provide a benefit, allowing quick pivots that can keep your business out of struggling industries during a downturn.
How can I prepare for a recession?
When it comes to preparing for a downturn, there are a few ways to get started.
1. Know your customer. Take a look at your current demographics, and how they’re expected to change over time. You can’t know too much about your audience, and knowing how they’re projected to evolve over the next several years can help you take action now to position your business for the future.
2. Develop a more robust offering. The best time to start developing a new product or service to stave off the effects of a downturn is now. Make investments in time and experience now can save you later.
3. Ask what your customers want. It’s an unspoken rule of business that your customers know what they want. Make sure to talk to them to find your current pain points, and allow them to drive the products they use.
4. Pay attention to the industry. Finally, keep an eye on your competition, and pay attention when they start looking for a way out. Position yourself as a potential exit path, and take advantage of existing businesses to grow when things take a turn for the worse.
How does preparation protect employees and culture?
In order to build a vision and a culture, you need employees who don’t feel at risk of being displaced should a downturn occur. Stability is the only way to create a truly long-term business, and that requires reinforcing your company against market fluctuations.
More importantly, being prepared now shows your team that your company is different from the competition, and many of today’s companies, in actually having a plan for the future that doesn’t involve going broke. This reinforces the value of your team members, and the loyalty they’ll have to your business.