Coming Through a Recession With a Stronger and Smarter Business

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Small businesses are the backbone of the American economy. You are responsible for half of all U.S. jobs and for 60% of net new jobs created since 2010. Yet, your small businesses can be severely impacted by a recession, and too often, you lack the resources to make it through hard times. As a small business owner, you are often faced with difficult decisions regarding how to change in order to save money. You may also have to deal with increased competition from big companies that have more resources to invest in marketing and other promotional activities. 

Fortunately, there are some ways that you can manage your business differently that will help you to make it through the recession. Here are solutions for making it to the other side unscathed.

Financial Recession Proofing

The first step to recession-proofing your business is to make sure that you are managing your finances well, and using a good business financial planner can help you with that. Here are some other tactics that you can use:

  1. Find new markets: look for opportunities in new markets where the competition is less, and you can establish a foothold and find new ways to increase revenue from existing customers
  2. Get creative with pricing: consider charging premium prices, bundling services, or using promotional offers to increase revenue. Or you can develop a new product to sell. 
  3. Reduce operating costs: this may involve laying off employees, looking into outsourcing certain tasks, or renegotiating contracts with suppliers.
  4. Create a financial safety net: make sure you’re keeping cash reserves on hand, as well as access to emergency investors, extra lines of credit, and keeping a rainy day fund.

Manage Your Employees

Although it’s tempting to lay off staff when money is tight, Silicon Public suggests trying to boost your company culture and business morale instead. Having a good company culture where employees feel appreciated and encouraged to grow can go a long way to holding onto your valuable staff even when times are tough. Be transparent about your financial situation and explain any company-wide changes that need to happen.

If you have cultivated a healthy workplace culture, then your employees will listen to and respect your decisions. Try to offer alternative incentives, like extra work from home days or PTO hours to reduce the financial stress of bonuses and team incentives. Continue giving your employees the tools they need to do their jobs well and the support they deserve to know their work is making a difference.

You can also switch some of your processes to free or low cost digital tools. Instead of outsourcing your marketing, use some free online tools to create social media posts and stories. Even cutting down printing costs by using a free PDF editing tool can make a huge difference. These editing tools allow you to add notes, highlight sections, and insert virtual sticky notes to avoid the printing costs while still getting the feedback you need.

Try Some Tech

Customer relationship management (CRM) systems can help your business manage customer data and interactions. They provide a 360-degree view of each customer, which can help you provide better customer service and develop a more targeted marketing campaign.

Automated invoice processing technology can help your business save time by handling invoice processing from production to payment reconciliation. On average, each invoice costs almost $4 to process, but automation, on the other hand, can seamlessly process dozens of invoices at a fraction of the cost. Customer support software helps you communicate with customers, organize and keep track of tickets, and troubleshoot customer requests. A primary feature is the ticketing system, which turns customer emails, calls, social posts, and chat messages into tickets that can then be sent to agents for resolution.

Choose the Right Business Structure

The popularity of LLCs has been on the rise since they were first introduced to the US in 1977 as a way to protect owners from liability. The purpose of an LLC is to shield its members from personal liability for the company’s debts and obligations. This means that any business debts or legal liabilities are not passed on to the individual members of the company.

When structuring as an LLC, there are some tax benefits that come with it. One example is that there are no taxes on any income earned by the company until it is distributed to the owners or members of the company, which can be a major advantage during tough economic times, such as a recession. Instead of hiring a lawyer, you can create an LLC yourself through a formation service.

Stay Focused, Move Forward, Succeed

Persevering through a recession is hard, but it can be done. By using a smart business structure, keeping your best employees happy with open communication, keeping an emergency fund, and finding creative ways to hold on to your existing customers, you can be one of the many small businesses that can come back from a recession stronger and smarter.

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