Recession Proof Your Business

Running a successful business through the ups and downs of changing market conditions is a sign that you’re doing something right. But do you have what it takes to thrive during an economic downturn or recession?

According to the Duke University/CFO Global Business Outlook, nearly half of U.S. chief financial officers believe the nation’s economy will enter a recession in 2019, and 82 percent expect it will happen by 2020.* The CFOs surveyed said that signs such as declining revenues and margins, decreased capital spending, excess capacity and anxious investors could point to uncertainty ahead.

After a decade of record-breaking economic expansion, going through a period of slower economic growth is almost inevitable. Indicators such as a flattening yield curve (when the gap between long-term and short-term interest rates narrows), market volatility and other factors could point to an economic dip, downturn or full-on recession.

Create Your Contingency Plan

What happens next is anyone’s guess, and it’s wise to be prepared for a range of economic scenarios. Consider the following tips for managing your business in changing economic conditions:

Identify your strengths
Focus on what you do best and how you can leverage those capabilities in a difficult economy. During lean times, it’s important to deliver on what makes you indispensable to customers — whether that’s cost, quality, turnaround time, convenience or something else.

Be ready to downsize
Review costs and look for opportunities to streamline operations. For example:

• Downsize inventory rather than storing or warehousing needless overstock.
• Renegotiate contracts with vendors at lower prices.
• Examine the success of your marketing/advertising efforts. Focus on what gets results and spend marketing dollars accordingly.
• Limit business travel and conduct meetings via video conference.

Keep your best customers
Instead of scaling back on products or services across the board, shift resources to retain high-margin customers. Use discounts strategically to reward your most loyal customers.

Ramp up service
Providing an extra level of service or convenience is a relatively low-cost way to get a competitive edge. Ideas for going the extra mile:

• Offer refreshments for customers as they shop or wait.
• Extended or weekend hours/availability.
• Delivery or drive-thru convenience.

Invest in employees
Having a strong team in place is critical during challenging times. Reward productivity with low-cost incentives such as flex time or extra vacation.

Plan ahead for financing needs
Don’t wait until you’re in a cash crunch — plan your safety net now. In addition to maintaining a comfortable balance of liquid assets, consider borrowing options designed to streamline your cash flow. Business loan products and credit lines can provide the flexibility your business needs to keep growing.

Talk to a member of our Lending Team for all your business related needs.

* Source: Duke University CFO Survey 2018