No one likes to think about a recession, but unfortunately, it's a reality that business owners have to face. When the last recession ended in 2009, the final tally of business closures was 1.8 million. That’s a pretty stark number. So, what can small business owners do now to prepare for a potential recession and come out on the other side? Below are some tips from the Crockett Area Chamber of Commerce that can help you brace for the worst and, hopefully, position you for better times once the recession passes.
One of the worst things you can do during a recession is to lay off your employees. Not only will this negatively impact morale, but it will also make it more difficult to ramp up production when business eventually picks back up. If you absolutely must let someone go, let people know sooner rather than later, and try to offer them severance pay or other benefits in exchange for their departure. To mitigate any potential legal fallout, ask for volunteers and thoroughly document layoff decisions.
Take a close look at your expenses and see where you can cut back. According to More Business, these cuts may include negotiating with vendors for lower prices, more control of office supplies, or downsizing your office space. Now is also a good time to reduce any outstanding debt. This can put you in a better position to maintain positive cash flow.
This can also be a good time to review and reorganize your files. Knowing exactly where your files, invoices, and receipts are can help you also understand which costs you can cut. Longer files can be separated using this PDF splitter. It’s a free tool, and it’s easy to use. Simply draw the divider lines where you want to separate, and save the new files in logical places on your computer or cloud drive.
Automated invoicing is a great way to ensure that you're paid promptly. When customers receive their invoices electronically, they can simply click a link to make a payment. This is much quicker and easier than mailing out paper invoices and then waiting for payments to come in the mail. In addition to automation, consider also changing your payment terms to prompt customers to pay on time. This could include assigning late fees after a certain date or offering a slight discount when payments are made early.
If your lease is up or you're just looking for ways to reduce overhead costs, consider changing your business location. This could mean moving to a smaller office space or even working remotely if possible. If you sell a product, it might be worthwhile to switch to an online model. Every little bit can make a difference in helping you save money.
Swapping your business designation during a recession can be a great way to save money. There are a number of different designations you can choose from, such as LLC, S-Corp, or C-Corp. Each one has its own set of benefits and drawbacks. For example, an LLC offers limited liability protection but is not taxed as a separate entity. An S-Corp is taxed separately but does not offer the same level of liability protection. A C-Corp is the most expensive option but also offers the most protection. Before making any decisions, consult with an accountant or lawyer who can help you understand the implications of each designation and which one would be best for your business.
Now is the time to get creative and think outside the box when it comes to generating revenue. Can you offer new products or services? What about partnering with other businesses? Be open to trying new things so that you can keep your business afloat during tough economic times.
Just because budgets are tight doesn't mean you should completely ditch your marketing efforts. Marketing is more important than ever during a recession. The key is to focus on creating targeted campaigns that reach your ideal customer. Also, don't forget about social media—it's a powerful (and free) marketing tool that can help you reach more people with less money.
No one wants to think about a recession, but as a small business owner, it's important to be prepared. By taking some proactive steps now, you can help better position your small business to withstand the coming storm. Use digital tools to get organized and find ways to reduce your costs. And adjust your work and marketing practices to get the most bang for your buck, while still valuing your employees. Lean times can be tough, but with some strategic changes, you and your business can make it through.
If you’re ready to grow your business with the help of great local resources and partnerships, join the Crockett Area Chamber of Commerce.
This Hot Deal is promoted by Crockett Area Chamber of Commerce.