How to Recession-Proof a Business

A recession occurs when the national economy declines in terms of GDP for at least eight months. Business owners are acutely aware of looming recessions because sales figures go down, expenses increase and interest rates fluctuate. You need to recession-proof your business during times of economic growth to avoid financial ruin.

Instructions

Difficulty: Moderate

1. Meet with your partners and investors to create a worst-case scenario to recession-proof your business. This emergency plan should be executable within a month of board approval and fund daily operations with the least possible amount of money.
2. Clean out your client list of late payers and low-profile companies to recession-proof your business. Mobilize your staff to make calls to these clients as you notice a downturn in the economy. These calls should involve calling in late payments and closing dormant accounts.
3. Increase your services to premium clients to protect your business from a recession. Special packages of reduced prices and expanded customer service can keep clients in the fold as the economy slows down.
4. Scoop up laid-off employees from rival companies to corner the market after a recession ends. The tendency to cut back on salaries and benefits by rival companies gives you an opportunity to invest in experienced professionals who will reinvigorate your business.
5. Tighten your inventory practices to insulate your business from a recession. You should invest in high-tech inventory systems like SkuFlow that require little investment in new personnel while keeping track of every product in your warehouse (see Resources below).
6. Invest in low-cost subsidiaries as competing companies retrench during a recession. An investment example is a commercial landscaping company expanding into residential lawn care with supplies from Northern Tool and Equipment using a current inventory of lawn supplies (see Resources below).
7. Keep your company's fees static as a recession approaches. A company that changes advertising, product and consulting costs with the changing tides of the economy will show instability to prospective clients.
8. Sell off unused properties in your holdings to recoup funds during a recession. The first step in finding the best time to move your buildings and unused land is to seek a competitive market analysis from a realtor like First Weber.

Tips & Warnings

• Adjust your marketing strategy to reflect new needs for your clients during a recession. Your advertisements and recruiting materials should focus on why your services are needed during a recession instead of a focus on the competition. A recession is a good time to advertise to new demographics that may be in need of your products and services.