The United States likely will experience a recession in 2023. As a small business owner or leader, this is cause for substantial concern.
Times of economic uncertainty make owning or leading a small business riskier than usual. The increasing economic variables make financial insecurity more of an issue than during more economically stable times.
Your best option to prepare your St. Paul small business for a recession is to begin saving now. The following tips can help.
Prepare your small business for a potential recession by taking these steps to save money now.
Review Your Cash Flow
Look at your financial statements to determine your monthly cash flow. Then, use your historical spending to develop a realistic monthly budget.
Create a spending plan that accounts for worst-case scenarios. Put off major expenses such as new office space or furniture. Include the purchases you likely will make within the next 18 months. This is how long the recession might last.
Determine which ad buys and costs are earning the most substantial returns. Stop the ones that are not paying off.
Renegotiate with your suppliers. You may be able to spend less on their products or services.
Consider opening a line of credit, applying for a grant, or looking for a low-interest loan. Gather your most current financials, business plans, references, organizational charts, and resumes so you can fill out the paperwork if needed.
Revisit your cash flow every few months. Adjust your spending plan as needed.
Pay Down Your Debt
Pay off as much of your company’s debt as possible. The less you pay in interest, the more money you save. Plus, the debt payments you were making can be used for other areas of your business.
Reduce Your Workforce
Consider whether you can downsize your workforce. This includes underperforming employees and redundant jobs.
Be aware your remaining workforce may be concerned about keeping their jobs. Explain what your plans are for these employees.
For instance, you might offer cross-training, upskilling, or other professional development so your remaining workforce can add more value to your organization. This helps you retain as many employees as possible.
Consider letting your workforce work remotely. This increases employee morale while saving on office utilities.
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