How Can Businesses Protect Themselves During a Recession

To contact us Click HERE

Many U.S. businesses are stillclimbing out of the 2008 recession and there’s still the possibility that wecould fall right back into one within the next couple of years. There’ssignificant uncertainty ahead of us as global economic growth remains subduedand the U.S. has yet to resolve key tax and financial matters related to thefiscal cliff. No matter what happens in the next couple of years, allentrepreneurs need to be prepared.
Reviewyour financial model
You may not be a financialprofessional, but you still need to understand how changes to company sales andexpenses will impact the bottom line. Work with your accountant orhire a financial consultant to help youunderstand what the impact will be from varying degrees of recession.Obviously, businesses with high fixed costs are at greatest risk during arecession, but each business model needs to be monitored for a five, 10, 15 and20 percent decrease in sales. By performing the analysis now, you’ll have agame plan for what needs to be done to maintain profitability and to sustainthe business during a recession. It may be that a 10 percent loss of salesmeans that you need to lay off or demote X number of employees and close Xnumber of locations. These decisions will need to be made swiftly and ahead ofthe storm, which is why you should create a plan now.
Focuson key customer relationships
Many small businesses live and die with their best customers. You’ll need tohave a plan for maintaining those relationships through the recession. If youneed to offer them a few discounts and freebies, so be it. It’s worth it if youthink it will strengthen your relationship and keep them onboard should theeconomy go sour.Stilltry to win business
One of the best times to take calculated risks is during a recession. In mostcases, your competitors are hunkering down until the economy turns. Thosecompanies that have a sizable cash cushion and access to outside capital maywant to go on the offensive to take market share away from their competition.Try to win over new customers with creative marketing campaigns and competitiveoffers
About BIDaWIZ 
BIDaWIZ is an online marketplace where small businesses can obtain professional tax, accounting and financial advice and services from a network of over 750 online CPAs, EAs, CFPs & Tax JDs. BIDaWIZ suite of services include the ability to ask professionals.