5 Tips to Help You Recession Proof Your Business

The 2020 global pandemic increased unemployment in the U.S. by 13 percent in the second quarter of the year. How did this affect you?

No one can predict the future. But there are measures you can take as a business owner to help recession-proof your business. While you can’t do much about the economy, you can take steps to make your business more resilient if a recession does hit.

The key to avoiding failure is profitability. This guide will show you how to recession proofing your business to succeed.

1. Diversify Your Customer Base

Don’t rely on just a few big customers for the bulk of your business. If one of them decides to cut back on spending during a recession, it could have a major impact on your bottom line.

Instead, diversify your customer base so that you have a mix of small, medium, and large customers. That way, if one or two customers do pull back, it won’t be enough to send your business into a tailspin.

2. Diversify Your Products and Services

Offering a variety of products and services gives you a built-in buffer against a recession. If customers start cutting back on spending, you can still make up for it by selling other products or services that they view as more essential.

For example, during the last recession, many people stopped going out to eat as much but were still able to buy groceries. So, while restaurants saw a decline in business, grocery stores continued to do well.

3. Build Up Your Cash Reserves

When a recession hits, it can take a while for businesses to feel the full effects. But once the impact is felt, it can be sudden and dramatic.

That’s why it’s important to have a cash cushion in place to tide you over during tough times. Aim to have enough cash on hand to cover at least three months of expenses.

This will give you some breathing room to make tough decisions and also avoid having to make major cuts too quickly.

4. Reducing Your Expenses

If your revenues start to decline during a recession take action to reduce your expenses quickly. This may mean making tough decisions, such as laying off staff or cutting back on marketing.

The goal is to reduce your expenses as much as possible without jeopardizing the long-term health of your business. Once the recession is over, you can slowly ramp back up and start growing again.

5. Focus On Your Core Customers

During a recession, businesses often want to cut back on marketing and advertising. But this can be a mistake.

Instead, focus on your core customers and make sure they know you’re still open for business. These are the customers who are most likely to keep spending during a recession.

So, if you can keep them happy and engaged, they’ll help you weather the storm. Be sure your SEO for businesses is up and running. If you don’t know how to start, get the experts‘ advice now.