Business revenue like the stock market is cyclical. Depending on your industry, you should have already identified the profit ebbs and flows of your particular business and planned accordingly. This business strategy usually works under normal circumstances.

Enter the year 2020. Unless you had a crystal ball, there is no possibility you could have prepared for a global pandemic as a result of COVID-19. Small businesses have become a major casualty of a worldwide event that was unforeseen and unplanned.

According to Susan Ward, writing for “The Small Business”, declines in consumer confidence and decreased sales can threaten all businesses, but small businesses can be particularly vulnerable. They often don’t have reserves to help them weather difficult times. From protecting your cash flow to building your customer base, implementing a few practices in advance can help recession-proof your business so it survives and even thrives during economic downturns.

Protect Your Cash Flow

Cash flow is the lifeblood of your business. Money must continue inflowing and outflowing for optimum business health, with the obvious goal being that you bring in more income than you must spend on expenses. You’ll have expenses as long as your business exists. It can be admittedly hard to keep the cash flowing in. Recession-proof your business by implementing strategies to keep the cash flow moving, from increasing sales or billable services to trimming unnecessary expenses.

Unfortunately, with the pandemic throwing a wrench in many business owners’ plans, hard decisions become necessary, such as laying off workers, closing locations, or reducing operating hours. To ensure your strategic plan is recession-proof and prepared for similar eventualities, be aware of what’s currently happening to your company. Managing your cash flow now during a recession can help you devise a plan that ensures you don’t have to make these hard decisions should another major world event occur in the future.

Review Inventory Management

Determine which items may be in less demand. Chances are your customers will be investing in products that they truly need. Reduce your inventory costs without sacrificing the quality of goods sold or inconveniencing your customers by focussing on the necessities. In addition, maybe you’re ordering too much of some items or, something can be sourced somewhere else at a better price. Is there a drop-shipping alternative that will work for you so you can eliminate shipping and warehousing costs? Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean that you have to keep doing things that way, especially when other ways can save you money (The Small Business).

Focus on Core Competencies

Small business owners often simplify the concept of “diversification,” translating it to simply “different.” Simply adding other products or services to your offerings isn’t diversification. At best, it’s a waste of time and money. Worse, it can damage your core business by taking your time and your money away from what you do best, damaging your brand and reputation. However, if you only offer one or a few products and services, a recession can uproot your business and force you to close. Offering new products and services can help you expand your customer base and serve a broader audience.

While rolling out a new line of products or services can be costly, it doesn’t have to be that way. In some cases, you can make a few minor tweaks and changes to existing products and market to a new audience. For example, if you own a manufacturing business that operates in the auto industry, you can try and market your products to the cycling industry or machinery industry. Once again, this is where creativity and thoughtful planning can help you diversify your products and grow your business.

Make the Most of Current Customers

You must continue to expand your customer/client base if your small business is going to prosper in tough times. This means drawing customers from your competition. Offer something more or different than what the other guy does. Research your competition to see what you can do to entice their customers into becoming your customers. How are your competitors advertising? Visit their business locations. Ask consumers what they like or don’t like about those companies, then tweak your own business practices accordingly.

We’ve all heard the old adage that a bird in the hand is worth two in the bush. The bird in the hand is your customer or client, and they’re an opportunity to make more sales without incurring the costs of finding new customers.

Even better, increase your engagement to your loyal, established customers. You can’t afford to ignore the potential profits of shifting your sales focus to include established customers if you want to recession-proof your business.

The key here is excellent customer service. Ensure that your customers or clients love what you do or sell, and keep them happy. Yes, that means the customer is always right. Identify their needs, then meet them. You want to retain their business all costs. This is more important during a recession than at any other time.1

Be adaptable

If there’s one thing 2020 has taught us, it’s that we need to be flexible. This is true for businesses, too. With businesses being forced to shut their doors or limit customer capacity, most companies found their sales plummeting. To ensure you’re able to continue serving your customers and making sales, you need to be adaptable.

For example, if most of your sales were in-person, revamping your business model with a company website to make online sales can help you serve your customers while they quarantine at home. Or, if your business relies on in-person customer service, consult with your landlord to see if you can transform a portion of the parking lot into an outdoor dining or shopping area. Being creative and adaptable can help you think of new ways to keep your business running even during a pandemic.

Don’t Cut Back on Marketing

Many small businesses make the mistake of cutting their marketing budget to the bone in lean times, or even eliminating it entirely, but this is exactly when your small business needs marketing the most.

Consumers are restless. They’re always looking to make changes in their buying decisions. Help them find your products and services and to choose them rather than others by getting your name out there. Don’t quit marketing. Step up your marketing efforts.

Watch Your Credit Scores

Hard times make it harder to borrow, and small business loans are often among the first to feel the squeeze, particularly for businesses with iffy credit ratings. Monitor yours frequently and keep on top of them. There are three major business credit bureaus and each assesses your business’s creditworthiness differently:

  • Experian
  • Equifax
  • Dunn & Bradstreet2

Keep tabs on your personal credit rating as well and do whatever is necessary to keep both in good shape.

You’ll stand a much better chance of being able to borrow the money you need to keep your business afloat if you have good personal credit as well. And keep in mind that the U.S. Small Business Administration makes easy-qualifying loans available during times of national economic crisis in addition to its usual funding programs.

Make Development a Priority

When business is strong, too many companies ease off their business development plans. If you do this, you’re setting yourself up for a fall.

Business development lays the groundwork for future sales. Set appointments in your schedule for time to network, brainstorm new strategies, and so on.

Create an Action Plan

Prepare for video auditions instead of in-person auditions. This will allow continuation of business efficiency, despite the unexpected circumstances of the pandemic.

Before an actual need arises, think about ways you can use technology to streamline your business. Maybe there’s a tool you could use to complete your projects for a lower cost or with less labor.  It depends on your business and your service or product. Regardless, though, now is the time to invest in technology that makes your work easier.

What do you do when business is slow? Do you twiddle your thumbs and wait for it to pick back up because you aren’t sure what else to do? If so, you’re not alone.

The problem is that most companies wait until their business is suffering before they try to find ideas to help the business. Instead, you need to create a plan in advance.

Make a list of concrete tasks you should do any time your business slows down. This could include investigating new product ideas, getting in touch with your contacts, marketing to your most loyal customers, and so on. This way, if the need arises, you’ll have a clear to-do list so you can get moving right away.

Nothing will make your small business 100% recession-proof, but implementing these can help ensure that your business survives tough times and possibly even profits from them. It all begins with analyzing how you’re doing things now and looking for ways to improve.

As a small business owner you must change your mindset. The marketplace has changed and in order to succeed you must adapt. It not enough to put reactionary plans in place. You must also become more proactive. Your business must be able to continue operating with minimal interruption. For example, Can the business operate remotely? Can customers be served online? Can you pivot to a different yet similar product or service? While you are always looking for ways to differentiate your business from the competition, you must also always strive to stay ahead of the curve.

Salomie Chung

Introducing Infinite Possibilities.