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How Can I Recession-Proof My Business?

Whether a recession seems to appear out of nowhere or it lurks on the horizon for a while before
looming large, a downturn in the economy can be tough to survive.
Even in normal times, it’s not easy to run a successful business. Only 36% of businesses - just over one
in three - manage to survive for 10 years or more.
When you add in a recession the odds of making it out the other side are even lower.
The businesses who manage to weather any economic storm are the ones that have planned in advance

for tough times - and that means recession-proofing your business. While there may be some actions you

can take which are specific to your industry, there are some general principles which apply to everyone.
#1: Develop a balanced workforce
Whether you have 5 employees or 500, it’s important to ensure that you have the right number of staff, and that they’re skilled

in the areas you need.
As the needs of your business change, the skills or size of your workforce may change so it’s a good idea to re-evaluate this
regularly.

Processes should be lean and efficient and should be organised in a way that maximises the full potential of your staff.

Multi-skilling is another critical area, for both your staff’s own protection and survival of the business. Having a flexible workforce
means that you’ll be better placed to meet the changing needs of the market and respond quickly to demand.
#2: Diversify… but not too much

Every business owner knows the value in offering new products and services, and in tough economic times this could be a

lifesaver. For example, during the global pandemic, restaurants who were able to pivot to offer a delivery service fared much
better than those who just shut down completely and waited for the worst to blow over.

Look for ways to meet your customers on a different pathway, whether that’s by using different channels or by offering

complementary products.
Be wary of diversifying too radically though. If you stray too far from your core offering, you risk your brand identity being

diluted and this can hinder rather than help your survival.
#3: Understand the value of marketing
Marketing your business may not be something you enjoy but it’s a necessary evil. Keeping your name in the forefront of your
customers’ minds is essential, and you can only achieve this through active marketing.

During a recession, you may not have the cashflow to invest in a big marketing campaign. However, there are ways to market
your business for very little, such as using social media. If the economy is in dire straits, it’s more important than ever before to
be constantly out there marketing and connecting with customers.
#4: Have an action plan ready
One of the big mistakes businesses make is waiting until things start to get difficult before they make a plan. Being reactive

rather than proactive means that your options may be more limited, and you might be too late to prevent your business taking
a big hit.
Assessing your risk and identifying your areas of vulnerability is something you should be doing while your business is prospering.
This will allow you to plug any gaps possible, while also creating an action plane which you can turn to at the slightest sign of
trouble.
This might include scaling down your inventory, utilising credit, clearing debt and reducing unnecessary business expenditure.
By planning in advance, you won’t be making any rash decisions, and you’ll have the time to consider your options more
thoroughly.
#5: Be smart about cashflow

One of the first things you might notice in a recession is your customers not paying their invoices on time. If you’re already
carrying a lot of cashflow issues, this could plunge your business into real difficulty right away.

Managing your cashflow properly at all times and chasing up invoices promptly can help your business stay in the best possible

shape when the recession inevitably arrives.
Reena Popat
Carter Bond Solicitors