3 Steps to Recession Proof Your Company

The Federal Reserve’s surprise Rate Cut on March 3rd was a warning to small businesses.  They did it to help the economy power through the anticipated global recession due to the coronavirus.  Typically, they are slow to address problems, but they actually got out in front of things.  This means the Fed is really scared, which means we should prepare now!  What should a company owner do?

1. Think and Plan – Consider how a recession will impact your business. Will customers cut back suddenly or gradually?  Do you have income guaranteed for a while?  Should you delay expansion or upgrade plans?  Can in increase in marketing help?

 2. Control Expenses – When income decreases, you have to reduce expenses fast. If any part of your operations are not efficient, get help fixing them quickly.  Look for areas with low margins to cut.  Evaluate your debt posture – if you are barely making payments, refinance now or the bills could close you down.

 3. Raise Capital – How will you pay bills with reduced income? Ideally, you have saved up, but think about a line of credit or a loan.  If there is a chance you will need financing, you have to get it BEFORE things get bad.  Once your income drops or you start bouncing checks you may NOT QUALIFY

Cash is king, so you want to position your company with better cash flow and a reserve.  This will help you survive and pick up business when the competition shuts down.


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