Do you feel like a recession is coming or the economy is about to crash? And what does that mean for your business?
There are five different ways that can help prepare your business for economic declines - even if you think the economy is going to be good for a while or good forever (if you’re an optimist)! These 5 ways will still help you save time, money, and energy in running your business even if it’s a side hustle.
#1: Seek advice and support
The first thing you can do is to seek advice and support. If you can get advice in advance of an economic downturn, this is going to help you plan with that expert’s support. Maybe you have a financial advisor or a coach to help you strategize with your business.
When the decline comes, you’re going to have a course of action that is set-in-place. It's time to reach out to mentors, business organizations, and other resources for guidance and support.
Also, if you can take classes or get the training now, this is a time when you can focus. You have the emotional stamina and the emotional bandwidth to be able to handle and think about bigger planning and strategizing. You want to be able to do that now, rather than in the future when you're trying to put out fires.
If you do work with a coach now, someone to support you, they're going to:
Then when the hard times come, they'll be able to support you through it because they already know you. They already know what works in your business. They are going to see what doesn't work. They're going to have background knowledge and history with you so they can work well with you and your business.
There was a time when I needed my book printed, and I needed 2000 copies of the Dynamic Woman Success Secrets book. This was at a time when there was a paper shortage coming. Thankfully, the printing company who was printing my book had enough paper because they had someone supporting them who gave them advice in advance telling them, “Hey, there's a paper shortage coming, you need to prepare.” Because of their advice they rented a storage facility and bought as much paper as they could so they were able to withstand the paper shortage.
Now, while that's not a recession, that would have been very detrimental. How do I know it was detrimental? Because a lot of other publishing companies went under. It meant that this company was able to withstand that time, and it's because they sought advice and support in advance of any trouble coming. They even took on other printing companies’ jobs because they were prepared.
The first piece is to seek advice and support. Get someone on your team to help you especially if you're a solopreneur, small business owner, or entrepreneur, where you're doing a lot of the things by yourself. They will give you an outside view to help you make good decisions and plan things out especially when the going gets tough and then they’ll also help you through it.
#2: Diversify your revenue streams
This is something I have done in my business, thankfully, because when COVID hit, I got screwed in some areas. I do online and in-person coaching, events, and speaking engagements. I have a podcast, books, and online courses. I have a bunch of different offerings. That's not even all of them.
But if right now, before a downturn, you can look for new products and services you could offer your customers, it gives you time to explore the current market you're in, but also, some similar markets you can expand into.
If you look for new products or services to offer your clients, it will help reduce the negative impact. When a downturn comes, you're going to be able to flip into this new product or service.
This is actually what happened to me. When COVID hit, I had a whole week of in-person events happening in Ontario I'd flown in for. I was at the hotel, and I was so disappointed in realizing, “Man, I have a social responsibility to cancel everything.”
Now, the year before, this was an $80,000 week for me. That week was on track to be a $100-125k plus week. Can you imagine losing six figures in one week? That was pretty detrimental. Thankfully, I had diversified my revenue streams in advance.
A question to ask yourself at this time is, “Can I repurpose what I already have whether it be a service or a product so that I’m ready to roll things out if something happens?”
You might be thinking, “Well, if the economic decline comes then maybe people aren't buying what I'm currently offering.” Okay, well, what would your ideal customer always need? Always pay for? The reality may be, “Oh, yeah, that's a luxury” or “That's nice to have”. But…
Also, if you want to do any research around the diversity of your revenue streams and which offerings you should do, your target audience would be more willing to answer questions now than when things get a little bit crazy.
Even if they’re answering questions in a downturn, you still should ask them questions now, to get some feedback about what they really need. It's better to ask now because you're going to really be able to hear them and they're going to be able to answer clearly. Then you can prepare the new offering while you're also emotionally regulated.
#3: Prioritize cash flow management
What does this mean in super easy terms? How much money is coming in, how much money is going out of the business, and really being on top of that. You need to know your numbers because then you know how long you can last and you know what you need to keep going and you know what profit will be coming in.
When you know your numbers, it helps you to make better decisions. When you know your numbers, you can have money saved for a rainy day. As my parents would say, “Always, always save for a rainy day because you never know.”
Well, business declines or economic declines come. They do. Whether it is from a pandemic or something else, there's going to be a time when things change. Knowing your numbers and having cash flow is important.
If you feel like something's coming soon, maybe it does make sense for you to do payment plans on different programs you're taking or different software you're purchasing or different options. You might say, “I'm not going to pay for it all upfront. I'm going to spread this out even though it might cost me more, it's going to keep more cash flow in my business.”
Then, once you know what your numbers are, really keep a close eye on the cash flow because you want to make sure you have enough cash on hand to meet all of your financial obligations. Just like in a family or with someone who has a mortgage, you want to make sure you have enough money to be able to pay that mortgage every month. You want to know your numbers so you can pay for your office space, your internet, your employees, whatever it may be because these are your financial obligations in your business, especially the things that you have to pay in order to make the money (your cost of goods). Those are key, and knowing which things you could maybe push off.
Now, for some of you, I do want to go back to the payment plan suggestion. For some periods of my life, I know that paying all upfront for something did save me and actually helped me to clear that off and pushed me to work harder to pay for it. I can remember investing in a coach. It was around $15,000 US and right away I was like, “Boom, I'm going to have an event. I'm going to do this offer and pay this all off in one go.” I did that, so that might be a key thing for you. I shared a little bit about my story of that week in Ontario right when COVID happened. I have financial obligations, right? That day, literally, the income that I was expecting to come in, was gone. It was gone right away. I had to refund everyone for the events because I couldn't put another date on with all of the restrictions.
I want you to ask yourself, if your income stopped tomorrow, how long could you last for? How long could your business run for? Where would you pull cash from? And going back to the other pieces, who would you ask for support, and how could you diversify? How could you do another offering?
#4: Start to build relationships with your suppliers and your partners
Start to build relationships with people you collaborate with, your suppliers/vendors and other people in your industry. Build really strong relationships. You want to do it now rather than when things get tough.
Now, why would you do that? Well, you'll be in it together. A lot of times with my vendors, suppliers, and partners, we want to see each other succeed. So when you have these strong relationships with them, they are more willing to help you out.
It can also increase your chances of success because you'll have other people who are invested in your success. Actually, then it’s also their success because if you stop hiring them as your vendor, your supplier, or partner, they're going to lose out as well. It’s nice to have a mutual desire of wanting others to succeed.
If I go back to that publishing company who had the paper, if you had a relationship with them then maybe they would help you out. There are a few ways this could work:
If you were unable to fulfill an obligation or hit an obstacle, do you have other people who could step in and support you? I hope so. So you can ask yourself, “Which of my suppliers, partners, people in my industry, or vendors do I need to build a stronger relationship with now to help me weather a storm if it comes?”
#5: Increase your efficiency
It’s important to increase the efficiency of you, your employees, and the company. Now is the time to make it a well-oiled machine, not when there's so much stress and fires to focus on.
Now's the time to really put some strong systems and processes into place. Now you don't have to be the one to build the systems and processes, it might be time to bring in a virtual assistant to be able to document those processes for you and to help make things happen there.
The other piece of this is it's time to invest in some digital technology and automation so you can start to reduce your costs and make things more efficient. Digital technology can be a more robust or efficient CRM. It could be bringing in other software or other platforms that are really going to cut down on the amount of time needed.
Now, this is not just so you can get rid of people from your company. But it might be so you can make everyone's position more efficient. You can reduce the amount of tasks you do. You can also increase accuracy because there's less human error.
If you're feeling like, “Ah technology, I don't like it”, again a virtual assistant might be able to be the answer for you to set up the technology and to keep the technology running. Since I have mentioned having a virtual assistant, I now have a team of 17 virtual assistants that work with 30+ CEOs/small business owners.
The CEOs I work with who are passing off work to their virtual assistants are now able to strategize, plan, goal set, and prepare for an economic downturn. If you're thinking about, “Well, how do I find the time to create additional income streams or revenue streams?” Well, if you pass off work, you'd be able to do that or even better they can create additional income streams for you.
This is also a very smart decision to make because when you want to prepare for something, you need time and energy. The best way to have time and energy is to pass things off. The other piece is that the VAs I hire are from the Philippines, so you're also able to reduce your employment, staffing, or contract costs in order to run your business. If you want to talk about this as an option for you, just message me firstname.lastname@example.org. We can have a chat about it.
So now you have the five ways you can prepare your business for economic declines. You may think, “Ah, this is too much!” No, it's not. Just bookmark this, flag it, whatever you need to do. What if, over the next five weeks, you took one of these each week and implemented it? In five weeks, you'd be sleeping better, you'd be running a better business, and you're going to start to feel that you're prepared, rather than being worried.
A lot of times in our lives, the worry is more debilitating than the actual negative situation when it comes. So I hope you'll put your own plan in place to prepare in case the economy goes on a downturn. Even if it doesn't, you have just put five great strategies into place, which are going to help you to build a stronger business, decrease your expenses, the time it takes, and reduce the amount of energy you need to put out. Who doesn't want more time, energy, and money?
If I can be of any service, please reach out to me. Maybe there's a coaching program I have that would be supportive of you or building up that strategy. I'm curious, what piece was most valuable to you? Share a comment, hit like, and share with a friend because “Friends don't let friends not be prepared for a recession”. That's not really a quote, but it's the truth!
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