Part 2: Field Guide

15 Tips for Surviving a Recession

Running a business is hard enough. Having to navigate through a recession is on a whole different level. 

If you have been in business for more than 2 years, you’ve already been through one recession. (2020 Recession) If you have been in business for more than 14 years, you’ve been through two. (2008-2009 & 2020)

We have researched over twenty different articles from various experts to gather a list of tips and ideas to help you chart your course so that your business will not only survive but potentially even thrive when and if a recession is officially declared.  

Tip #1: Have a plan. It may seem obvious, but the companies that have an advance plan far outperform those that wait and go into survival mode once it hits.  

Tip #2: Protect Your Cash Flow. Get a handle now on your current cash balances and monthly sources of cash. Create a cash flow chart for the next three to six months to help guide you and that will help alert you to any variances.

Tip #3: Manage Collections. When times are good we don’t always keep a close eye on our receivables. As things begin to tighten up, people and businesses start to make decisions on who gets paid and when. The old rule applies, the squeaky wheel gets the grease.

Tip #4: Build Cash Reserves. If you can! Cash is King. Any additional cash you have available will help you make better decisions and will make sure you are able to take advantage of opportunities if/when they arise.

Tip #5: Credit from Suppliers/Vendors.  Have this discussion in advance. 

Tip #6: Consider Securing Financing.  Again, far better to have this in place rather than going to a lender when the need arises.

Tip #7: Examine Expenses. Look at all of your expenses and determine where you can cut without affecting your quality of service or performance or the safety of your employees.

Tip #8: Don’t Stop Marketing/Advertising. History has proven time and time again that the businesses that maintain and/or grow their marketing during the recession will far outperform the competition during, and even more so after, the recession has concluded.  

Tip #9: Optimize Inventory. Analyze your current inventory and see if/where you can utilize it to create additional revenue and or savings.

Tip #10: Manage Current Debt/Payables. Make sure you are in good standing with your vendors. As you would too, businesses that are slow payers will be the first businesses to be cut off. 

Tip #11: Streamline your Operation. Look for any opportunities to make your business run more smoothly or less costly. Consider eliminating unprofitable products or services.

Tip #12: Look Beyond Lay-Offs. While some lay-offs are often unavoidable during a recession, looking for alternative options is a better option (Refer to Tip #11). Historically, companies that maintained their staff outperformed those that laid-off employees. Consider reduced hours, furloughs, and performance pay as options.

Tip #13: Focus on Current Customers.  As they say, “A bird in the hand is better than two in the bush”. Make sure that you are over-servicing your current customers. Ask your current customers for feedback. Find new products that your current customer base might find appealing.

Tip #14: Communicate with your Employees. While this is always a good practice, during this critical time, it’s far better to over-communicate rather than under-communicate. Remember, they will be anxious too, wondering if their jobs are secure or not. Don’t be afraid to say, “We’ll all need to be 10% more productive and efficient”. Make sure you include your employees in creating solutions and problem-solving to help run your business more smoothly.

Tip #15: Establish a Growth Mindset.  The mind is a powerful thing. Don’t just accept that business is going to be flat or down because of the “R” word. Motivate your employees and establish a culture that is one of growth. A recession is a perfect opportunity to conquer your competition and grow your market share.