It is common to feel unsure and overwhelmed about the future of a business in the times of economic uncertainty. Kavan Choksi, however, does mention that there are certain strategies that business owners may follow and implement to make sure that their business survives tough economic times. One of the most vital things they can do is to try to stay resilient during harsh economic conditions. Staying resilient implies to keeping a close eye on the business finances, be willing to make changes to the business model, and staying flexible when it comes to the products or service offered by the business.
Kavan Choksi underlines a few effective ways of recession proofing a business
The United States has experienced 12 recessions since World War II as per the National Bureau of Economic Research (NBER), on an average of one every six years. Recessions are way more common than most people realize, and the majority of business managers are likely to encounter several over the course of their operations. Therefore, it becomes important for business owners and managers to prepare their company to survive and possibly thrive in the long run. Here are a few of those ways:
- Create a cash flow plan: Running out of cash is among the prime concerns of business owners, especially during a recession. Hence, they should be systematic about handling their current cash balances, as well as monthly sources and uses of cash. It would be smart to create a rolling cash forecast for the next quarter that can be used to guide the management team, and serve much like an early warning tool that alerts them about variances.
- Assess workforce needs: Business managers should take a stock of the number of employees and their skills to make sure that they align with the business requirements and concerns that may come up during a recession. It is vital to be ready to make adjustments with time so that the employees work competently and are organized in a manner that maximizes their potential.
- Operate within the budget: Operating within the budget helps the business to be in the best possible position financially as a recession hits. Certain recessions, like the one linked to the onset of Covid-19 pandemic, came without any such economic early-warning signals. Hence, businesses should be consistent about operating within the budget.
- Build up employee skills: During a recession, a business would depend on its team to stay flexible and think creatively. Therefore, it is vital to make sure that the employees have the expertise and knowledge to deal with the challenges that a recession may bring. Cross training the staff and building up their skills can help achieve this goal.
- Track marketing key performance indicators (KPIs): Businesses must put emphasis on tracking the marketing results and monitoring marketing KPIs. During a recession, they should only continue the campaigns that achieve their desired results.
As Kavan Choksi says, often medium-to-large family businesses are the ones to be most successful in weathering economic downturns. Their success can be partially credited to several generations having the experience and knowledge to ride out the ups and downs of many business cycles patiently. Proper planning and adequate patience are important for recession proofing a business.