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How to Prepare for a Recession: Tips for Business Owners

How to Prepare for a Recession: Tips for Business Owners

If you’re feeling like you can’t catch a break when it comes to your business, you’re not alone. After navigating an unprecedented global pandemic, the country is now dealing with high levels of inflation and an impending recession. Wix says that 56% of small businesses have reported that things have become worse since the beginning of the year.

The good news is, that there are many ways you can prepare your business for the darkest days. Take a look at these tips on how to prepare for a recession and be sure to hold onto everything you’ve worked so hard to build.

Reduce Expenses

When you think your business could struggle because of a recession, one of the first things to do is take a fine tooth comb through your expenses. Look for any expenses that can be reasonably reduced and reduce them straight away. Don’t wait for the recession to hit; start saving that money now.

The expenses that are still necessary to pay could still be reduced. Be sure to look for any discounts, such as sourcing the best business insurance deals, office supplies quotes, or reducing your delivery fleet.

Manage Cash Flow

Correctly managing your cash flow is essential at any time but even more important during a recession. You should be consistently on top of your unpaid invoices and able to put aside an emergency cash fund. This is can be difficult to do without the help bookkeeper. When you hire a bookkeeper you can pass on your cash flow management so you’re free to deal with other aspects of the business.

If you find that many of your clients are late payers, you can form a legal contract that binds clients to pay on time or risk further fees. It’s much easier for businesses to manage cash flow and prepare for a recession when they can predict when cash will be received.

Ask Your Employees

Your employees are on the front line and have first-hand contact with your clients. They may have creative ideas about bringing in new revenue to the business without having to invest too much. They may also be able to tell you where you can make cost reductions without making their jobs more difficult.

Asking your employees for this advice will also reassure them that you value their input and can spark an interest in them to work innovatively. Employees who feel valued are less likely to leave for other jobs meaning you won’t have to spend as much on recruitment in the future.

How to Prepare for a Recession in 2022

In 2022 anything is possible so figuring out how to prepare for a recession in business is just another thing to overcome. With the right motivation and guidance, it is possible for your business to survive and thrive in a recession.

If these tips have been helpful, why not take a look at our other articles?