Building a Resilient Business in a Recession

According to a recent YouGov poll, three in five Americans think we’re currently in a recession.
The U.S. Government has also announced that the economy had shrunk by 0.6% from April through June this year. This is the same as the previous quarter, which puts us into a recession by the general definition of two consecutive quarters of negative gross domestic product (GDP).

But, economists disagree. The feeling is that with a strong labor market and corporate profits still on the rise, we have not yet entered into a recession.

Whatever you believe about the state of our economy, it’s hard not to worry about where things are heading.
Even if the economy were booming, it’s good to make sure the foundations of your business are strong. With that in mind, let’s look at some things you can do to build resilience in your business should a recession happen.

What Do We Mean By Resilience?

A resilient business can survive the toughest times and come out the other side. Business resilience is the ability of an organization to survive significant disruption while protecting its operations, people and assets. The term is applicable in times of civil unrest or natural disaster, but it’s also appropriate to think about resilience when faced with the potential major upheaval of a recession.

So let’s go through five things you can do to your business to survive whatever the economy throws at it.

Cull Your Client Base

Are there customers who don’t pay, are slow to pay, or always gripe about price? If you answer yes to this question, then it’s time to get rid of them.

While slow payers won’t be the end of your business, it’s mentally draining and time-consuming chasing up outstanding payments. If you’re already in a high-stakes situation such as a recession, this is the last place you and your staff need to be spending their energy. Go through your client list and review it. Then, if you need to, remove those clients who are not serving your business.

This has the added benefit of freeing you up to find customers happy to work with you on your terms — at the price you set.

Cash Is King

Let’s talk cash flow.

Businesses with low cash flows are unstable and particularly vulnerable in a downturn. Take the time to look at the products you offer. What’s your best seller? What service or product brings in the most profit?
Can you change something about a current service you offer that will allow you to generate more cash? Is there a product or service you could provide but currently don’t?

This is also the time to look at costs in your business, expenses, training costs, travel costs and more.

Concentrate on Existing Customers

Many businesses spend time attracting new customers, but it’s expensive, and in a downturn, you need to account for every penny.
Reward those loyal to you by looking at special offers and discounts. If you haven’t already, start an email newsletter so that you build your relationship with them. Loyal customers are likely to return and spend with you rather than a competitor, and they will also be your greatest source of advertising.
Word of mouth is powerful. Treat your customers well, and they will return and bring their friends.

Flexibility Is Key

Be prepared to pivot at a moment’s notice. Perhaps you’re offering a particular service that’s not been well received. You’re still offering it because it’s what you’ve always done, but should you continue to do so?
Don’t be afraid to change up what products and services you offer. Unfortunately, no one has a crystal ball; during a recession, you may need to make difficult decisions quickly.

Review Your Inventory Management

This may not apply to all businesses, but if you have an inventory, review how it’s managed. Excess stock in a recession is bad news for a small business. There are several ways to manage an inventory more efficiently. Research them and see if they make sense for your business.

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These are five ways you can build resilience in your business. Do your research and make sure whatever action you take fits your business and circumstances. With some thought and hard work, you can build a resilient business that will survive anything the economy throws at it. For more helpful tips to grow your street sweeping or paving business, subscribe to the North American Sweeper Magazine today — the digital version is free!