Recession-Proof Your Business: 5 Tips and Tricks
If you’re concerned about how a potential recession could affect your business, it’s time to take action. You can take steps to recession-proof your business so that you can stay afloat during difficult economic times. These tips from the Castro Valley/Eden Area Chamber of Commerce will explain how to register with the best business structure, organize your financial documents, and refine your budget.
Choose the Right Business Structure
Before you dive into any major business strategy changes, it’s a good idea to reassess whether or not your current business structure is the right choice for your company. You may want to register with a structure that provides stronger security or more financial benefits instead. For example, if you’re currently operating as a sole proprietor, consider filing for an LLC so that you can gain additional legal protections and tax breaks.
Every state has its own set of rules for forming an LLC. To ensure that you’re meeting all of the requirements, you can work with a lawyer or file through an online formation service, which is generally cheaper. You’ll also need to name a registered agent to receive documents and communicate with the government and tax authorities.
Organize Your Financial Records
In order to ensure that your business is on a stable foundation, you’ll need to go over all of your financial records in detail. Take some time to organize all of these documents in an easily accessible digital storage system. As you digitize your paper records, you may want to create separate files to avoid using one large document. You can utilize an online tool to learn how to separate pages in your PDF by splitting them.
Create Stable New Revenue Streams
You may want to introduce new products or services for your customers before a recession. By offering necessities, you can create steady sources of revenue that won’t dry up when funds are tight for your customers. For instance, depending on your niche, Fulfillrite recommends introducing offerings like consumer staples, coffee and tea, candy, pet care products, basic clothing, baby products, kitchenware, or tools for DIY home maintenance and renovations.
Reevaluate Your Budget
Naturally, going over your budget with a fine-toothed comb is an essential aspect of preparing your business for a recession. Figure out if you’ve been wasting money on any unnecessary expenses. Connecteam recommends using free software programs whenever possible, allowing your team to work remotely so that you can save on office rent, using free platforms for marketing on social media, figuring out how you can cut your utility costs, and identifying any areas where you could be more efficient with time management.
You’ll also want to focus on paying off any business debts. If you’re struggling to put together a debt payoff plan, you may want to meet with a financial advisor who specializes in working with small business owners.
Assess Your Workforce Needs
You may not need all of your staff to work full-time hours in order to accomplish your financial goals. Furthermore, when new projects come up, think twice before bringing more full-time employees on board. Instead, consider whether you could hire contractors who can work for you in the short-term but will cost your company far less in labor expenses. Many contractors bring specialized skills to the table and can produce high-quality work for a fraction of the cost.
For business owners, facing a recession is extremely stressful. But this does not have to spell out the end of everything you’ve worked for. By selecting the right business structure, keeping your financial records organized, and tapping into reliable new revenue streams, you can ensure that your business thrives during a recession.
The Castro Valley/Eden Area Chamber of Commerce is prepared to help your small business succeed. Take a look around our site to learn more about our resources.