10 Business Tips on Surviving a Recession
Updated: Oct 27, 2022
In today's business climate of high inflation and rising gas prices, many companies are bracing themselves for an upcoming recession. In this article, we will look at 10 tips on how your business can survive an upcoming recession.
1. Review your expenses and find ways to cut back
Take a hard look at all of your expenses and segregate all necessary business expenses from your non-critical business expenses. There may be some non-critical services or products that you can do without, like monthly recurring IT and software subscriptions that you can cancel, or unnecessary office expenses that can be eliminated. Once you have a clear understanding of what your company can and cannot live without, look for ways to cut back on costs.
2. Review your pricing and find ways to increase your rates
If you find that you are regularly undercharging for your products or services, it may be time to review your pricing. Do some market research to see what your competitors are charging for similar products or services. In times of high inflation, it might be necessary to adjust your prices upwards to keep up with the rising costs.
3. Evaluate your staffing levels and prepare for potential layoffs
Make a plan for reducing production capacity in your company if necessary and brace for a decline in demand for your products as well as a decline in revenues. This may include laying off staff, reducing employee hours, or taking other measures to reduce expenses. If you do have to lay off employees, be sure to do so in a way that is fair and respectful.
4. Renegotiate contracts with suppliers and vendors
When possible, renegotiate your contracts with suppliers and vendors. This may include extending payment terms, getting discounts for early payment, or finding other ways to reduce the costs of doing business.
5. Review your marketing budget and find ways to cut back
Look at your marketing budget and find ways to trim the fat. This may include eliminating targeting high customer acquisition cost channels or reallocating your budget to more cost-effective marketing channels. Every business is different, so be sure to tailor your marketing cuts to fit your specific situation.
6. Seek government assistance
In times of economic hardship, the government may offer assistance to businesses in the form of loans, grants, or tax breaks. Be sure to research what type of assistance may be available to you and your business.
7. Consider ways to increase revenue
There are many ways to bring in additional revenue, even in tough economic times. Look at your product offerings and see if there are any new products or services that you can introduce that will appeal to your target market. Be sure to avoid starting a new product or service that is difficult and costly to implement.
8. Evaluate your overhead costs and find ways to reduce them
Examine all of your overhead costs and look for ways to reduce them. This may include renegotiating your office lease, downsizing your office space, reviewing your business insurance policy, or eliminating unnecessary costs like the company gym membership.
9. Stay positive and keep your employees motivated
As the leader of your company, it’s important to stay positive and keep your employees motivated. This may be difficult in times of economic hardship, but it’s important to maintain a good attitude and keep your team focused on the future. Try to find ways to comfort your employees and let them know that you are all in this together.
10. Cash is King
Keep a close eye on your cash flow and build up your war chest, which will help your business survive the upcoming economic downturn. If possible, delay capital-intensive purchases unless there is a near-term economic benefit that can be achieved. Make sure you have a good understanding of your burn rate and take measures to reduce it if necessary.
The current economic conditions are tough, but there are ways to weather the storm. As a business owner, you should review your costs and find ways to reduce them. You should also seek government assistance if it’s available and consider ways to increase revenue. In addition, it’s important to stay positive and retain your best employees. Most importantly be sure to protect your cash flow, as it will be crucial in helping your business survive an economic downturn.