4 Ways to Prepare for the Next Economic Downturn Today
Economic downturns test the mettle of many small businesses. Those who normally enjoy comfortable profit margins are hard-pressed to stay ‘in the black.’ Some businesses cannot withstand the pressure and eventually close down. Whatever your situation, don’t fret… even the smartest businesspeople have suffered along with their customers when the economy slows down. It’s the degree of suffering which determines the good from the not-so-good businesspeople.
Thankfully, it looks like we’re slowly recovering from this last downturn. People are beginning to invest in their homes once again, and you’ll be able to get business back to normal. However, life has a way of repeating itself. It may not be for another 10 or 20 years (hopefully, much longer), but another economic downturn will happen… it’s a certainty… So, it’s time you prepare for it now, so that you see a minimal impact! (It’s true… some businesses still thrive during downturns – it’s possible, but that’s another story…)
How do you prepare for a downturn?
- Start by putting a little extra cash aside each week. You can call it your rainy day fund. But having extra cash on hand, you can be assured that you’re able to keep paying your bills and paying your people. (The last thing you want is creditors knocking on your door and tying up your phone lines!)
- What’s that? You say you rarely have extra cash? Then I suggest you look closely at your pricing. If you’re not priced right, you’re going to have many more problems surface before the next economic downturn hits! Make sure you’re being paid what you deserve!
- Speaking of cash, you should also be working hard at collecting the money you’re owed! Hopefully, your receivables are minimal, but if they’re not, get that money and put it in your rainy day fund.
- This is a perfect time to mention this, as well: You really shouldn’t have many receivables! If you’re in residential and/or commercial service, you should be getting paid immediately after your services are rendered! People don’t go to a restaurant and expect to be billed for their meal! No! They pay immediately, and you should be paid immediately! If you’re not accepting credit cards and offering financing so people can pay immediately… you need to change that!!!
Those few, little changes will help you prepare for the next economic downturn… and you’ll find you’ll enjoy a better business immediately!