Five Tips to Survive the Next Economic Downturn
It’s not if, it’s when…
No, I’m not trying to be Debbie Downer here, I’m just being realistic. For those of us with small businesses, an economic downturn or recession can hit us hard, some to the point of being business-ending.
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I managed to (barely) survive the last recession as a small business owner by the grace of supportive parents, which isn’t easy to admit at this age, learning to do a lot of things for myself, and scaling back… way back. If I had $10 in my checking account at the end of the month, I was doing well.
And not only was I struggling, so were my clients. And you know what that means… if they’re struggling to keep the lights on, they’re going to scale back with you. And then you’re going to struggle to keep the lights on. A vicious cycle indeed.
I bring this up because it feels like we’ve gone back to comfortable. Splurging more here, spending more there. I know because I’ve found myself doing it too. Ten years ago my Sirius satellite radio was one of the first things to go; now I’m like – oh I have to have that. How soon we forget.
So I’m not suggesting that you start shutting off all of those “must-haves”, that really are extras, I’m just saying it’s time to start positioning ourselves for less than favorable economic times. And I’m right there with you, I need to do the same with my business so that I can continue to not just survive but thrive.
A few of the things that I did ten years ago out of pure necessity:
- Cut back on every extra subscription, monthly payment or dues that you possibly can. At minimum, prioritize them so if the time comes, you’re not grasping for straws wondering where to start.
- Make Google and YouTube your best friends if they aren’t already. Be prepared to learn some things for yourself, whether it be repairing an appliance or fixing broken code on your website. I did it and so can you. Repair bills, no matter what they’re for, get expensive quickly. Besides, problem solving is a great skill to have on your resume.
- Build your network. Make a point to meet people, and tell every one what you’re doing. Consider bartering for services with other professionals. My Pilates teacher and I swapped website work for workouts. She got a great website and I got into the best shape of my life!
A few things to start doing now:
- Dave Ramsey school of money. Get rid of debt, build the emergency fund and build the long-term fund. Yep, I need to do this too. Interestingly enough, some “experts” are saying to increase credit lines to prepare for a downturn. It’s far easier to get financing or credit when you don’t need it. I get the idea, but the notion of opening up the opportunity to increase debt is a scary one for me. Do what’s right for you and your business there…
- Rethink monthly expenses. Are you paying “a little extra” for products and/or services that you don’t necessarily need or use? Business software is one of the first things that comes to mind.
- Be mindful of the hiring process. If you have employees, or are considering adding additional people to the workforce, remember that a downturn affects them as well. What if you have to lay someone off or scale back their hours? The extra person in the office right now would probably be a great help but are they going to be one of the non-essential expenses that you have to cut? Because that person isn’t a line item you know…
- Diversify your client base. Do you rely mostly on income from a few clients? What would happen if that amount was cut in half? Or went away completely? Spread the wealth as they say. Consider targeting some smaller-scale clients from different industries to reduce overall risk.
- Build your network. Yes I’m repeating myself. Build your network of followers and communicate and engage with them. Stay in contact with email marketing, social media and above all, personal communication. Don’t be the person or company that they forget about – or put their list of non-essential expenses. Be the one who shows up consistently and go above and beyond for them. Loyalty really is a thing!
We all get comfortable when times are good. Personally, I think now is a really good time to consider where the money is going and to make sure that there’s a cushion in place for the next go-round. Build solid relationships with your clients and support one another. We’re all in this together, good times and bad.
Because it’s not if, it’s when. Will you be ready?