As a small business owner, you are undoubtedly always concerned about how your company will fare when a recession hits. With 2020 looking ripe for a pandemic-related recession, how can you put your business on a trajectory to weather the storm and come out thriving? Here are a few key steps to take.
1. Consult With Pros. You may be a professional at whatever you sell or provide as a service, but you aren't likely to be a financial professional. Avoid the temptation to cut costs in ways that hurt your business by forgoing professional assistance to prepare. Financial consulting services will look at your business from income to expenditures to future plans. They can help you get control of things both now and when the money gets tight.
2. Cut the Right Costs. Recessions cause most companies to 'batten down the hatches' by spending less and conserving resources. But you could do more harm than good if you cut in the wrong places. You may want to cut packaging costs, for instance, but you can't risk damaged or slow shipments that annoy customers. Work with your financial consultant to identify ways to cut that will not affect the customer experience.
3. Do a Trial Run. Not sure how your business might do if sales decrease or materials cost more? Work with your accountant to do some 'test runs' of various scenarios on paper. Recession scenarios might include things like lower overall or individual product line sales, vendors going out of business, reduced labor use, a weaker dollar, or changes in consumer behavior.
4. Expand Services. If some products are less likely to sell well during a recession, take the time now to look for alternative streams of income to start up. Do you sell a certain piece of equipment? Consider adding a different line of equipment to diversify your sales or selling repairs and parts for owners who will fix up older machines during the recession. Ideally, look for products and services that are more likely to increase as traditional ones decrease.
If you work now to create a plan for the recession, you will be in a position that your competition can't match. Not sure where to start? Make an appointment today with a financial consultant who specializes in small businesses. With some extra work now, your business can meet whatever 2020 holds and look forward to the future.
If you're a business owner and you don't have an accountant, you might want to consider hiring one. Accountants help business owners by handling the books, filing tax forms and managing the costs of the business. They also offer guidance to concerning important business matters. We aren't accountants, but we do have an understanding of the importance of their duties.
We've interviewed accounting professionals and they've answered all our questions about their job description and explained how their services can benefit business owners. We've compiled all this information into articles that we've posted on this site. We hope that you will read them to learn how an accountant can benefit your business.