12 strategies to make your business recession proof

12 strategies to make your business recession proof

The US has witnessed 12 recessions since World War II, an average of one every six years. Hence, it is crucial for business owners to prepare to survive and even thrive through recessions. As the impending recession comes coupled with the aftermath of the Covid-19 pandemic, the impact is going to be felt multifold.

Recessions typically last between two to twenty- four months and impact different industries differently. Essential products like food, utilities and household staples and services like healthcare, education and automotive repairs are least impacted. We’ve explored twelve important strategies aimed at recession proofing your business of which a few would apply specifically to certain businesses.

  1. It is critical to have a CASH FLOW PLAN which defines monthly sources and uses. You should also have in place a cash flow forecast that alerts management of variances. Sources of low- cost capital and alternative financing, government resources etc. must be explored much before one is going to need to use them. Creating an emergency cash cushion fund to cover up to six months of essential costs including payroll, inventory, and utilities along with collecting receivables more aggressively and being covered by business continuity insurance are different paths to stability during recession. You can also consider appraising assets which may be used as collateral, extending credit options with vendors, improving business credit rating, renegotiating existing loans and exploring hitherto unused avenues like asset-based financing of accounts receivables, purchase order financing etc.
  2. WORKFORCE NEEDS must be closely monitored to have the best hires in terms of numbers and skillset qualities. They must be encouraged to work efficiently to maximize their potential. Investing in employee skills through effective training helps businesses stay flexible and think creatively during a recession. Employees must be made to feel connected to the business and more willing to go that extra mile.
  3. Following a BUDGET or operating plan is a great all-time practice, and even more valid going into a recession.
  4. Monitor MARKETING OPERATIONS continuously through KPIs (Key Performance Indicators). Only performing operations should continue and others terminated. Action plans drawn out well before the onset of a crisis leads to thoughtful, minimum- error decisions as against the error prone, on-the-spur-of-the-moment decisions.
  5. Understand the COMPETITION in-depth from the customer’s perspective. Always striving to stay ahead through better service, superior technology and updated skills gives one the desired edge when recession strikes. In all economic times and especially during recession, staying close to the customer and understanding their changing needs helps your business preserve revenue and consolidate your market presence.
  6. Be patient; useexperience and wisdom to ride out the storm. At the same time maintaining LOWER DEBT LEVELS equips an organization with the resilience to withstand the onslaughts of a recession. Pay off your debts as early as possible, to save interest expenses which can be routed to cash reserves. Maximum capital availability arising out of debt-free operations gives an organization an edge during recession.
  7. Have FLEXIBLE AGREEMENTS with clients where customized offerings can be made in return for faster payment terms. Rewards like these can not only help stabilize revenue systems but also create goodwill and repeat customers.
  8. CUTTING OPERATIONS COST by tweaking big costs can result in huge expense reductions without compromising end quality. Obtain early-pay discounts from suppliers, automate certain manual tasks, re-organize labor between full time and contractual. Organizations may need to have a fresh look at vendors, staff perks, travel, and entertainment spending, outsourcing certain functions, real estate consolidation and moving to remote working options.
  9. CREATING NEW REVENUE STREAMS using the current infrastructure involves some out-of-the-box thinking. It could involve extending the geographical footprint, identifying new products and services, reinventing the distribution channel by selling online etc. Modify the existing products to better suit changed market demands.
  10. STRATEGIZE well by delegating to well- trained capable staff who run a tested system- based organization where processes are clearly well-defined. This is always the basis for a sound business. This allows business leaders to steer and navigate the ship rather than row the boat during a recession. It may require involvement in strategic partnerships that increases the perceived value of the end-product delivering value, quality and durability during difficult times. Fine-tune to market needs and competition to make sharp on-the spot directional changes in business strategies that are in sync with market trends.
  11. SPECIALIZATION amounts to understanding your market requirements particularly well to be able to exclusively cater to their special needs better than most competitors.
  12. DIRECT & MONITOR SPENDINGS by relooking at current investments for their returns and exploring new avenues for higher returns. It would also mean deployment of state-of-the-art technology to cut costs and at the same time delivering quality in half the time. While critically visiting investment returns, it is important to continue marketing and promotion efforts and loyalty campaigns to consolidate the current, healthy customer base. This helps keep the competition at bay and creates a strong referral point for new customers.

We, at Aligned Studios, have implemented stringent businesses practices that safeguard us against potential threats of recession. We are cost conscious and hence deploy our resources optimally to deliver premium quality to our clients at optimal cost. Our clients are our business partners and hence get to enjoy the benefits of our streamlined cost structure. Our hires are meticulous to ensure the best available in the industry, again enabling us to consistently deliver premium quality to our clients. We regularly update our staff with state-of-the-art training and empower them with the latest technology to enable them to perform efficiently and deliver the best consistently.

Want to make your AEC business recession proof? Let’s schedule a quick call.


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