Modern business owners should put emphasis on recession-proofing their organization. This would imply to making a company economically resistant through actions that can shield the business during recessions. As per Kavan Choksi, there are a number of ways to prepare a business for recession, starting from lowering expenses and scaling back ambitions to monitoring cash flow. It is not always possible to predict a recession or control whether it happens. Hence, business owners should try to increase the likelihood that their company continues to face success no matter the state of the economy.
Kavan Choksi sheds light on a few ways to prepare a business for recession
Small businesses may have to ask for financial help throughout the course of a recession, even if it is expensive. However, this should not be seen as a sign of failure. Rather, it is prudent to get ahead of the curve by securing financing before it actually is necessary. One would have higher odds of being approved for a business line of credit when their company profits are going well. If one does apply in the middle of a recession, it can become harder to qualify.
Focusing on cash flow management becomes vital for surviving a recession. Good cash flow management would include creating an emergency savings fund, as well as following up on past-due invoices from clients. A company should ideally try to keep the equivalent of three to six months of expenses in an emergency cash fund. Managing the receivables may also help protect cash flow. Business owners must have legal contracts in place in regard to late fees in order to lower the risk of outstanding balances going unpaid. They should also try to collect deposits for high-paying jobs upfront to lower the risk of nonpayment. Even though it may seem fine to let a few loyal clients get a month or two behind on invoice payments, staying up to date with them is instrumental in preparing for a recession and avoiding operating at a loss.
As Kavan Choksi says, to prepare for a recession, a company must also take a good look at their current staffing situation. They must have the appropriate leaders in place in order to maintain focus on the priorities and goals of the company. Business owners should try their best to retain their top talent. They also need to keep a check on whether their teams are being adequately productive and delivering at the level needed to advance the business goals. Opportunities to outsource can make business operations run more efficiently and also smartly scale to mitigate the need for downsizing.
Employees tend to be pretty heavily integrated into the day-to-day operations of a company. This basically means that they are likely to have a good understanding of the opportunities that can help increase savings and reduce business costs. Hence, business owners should turn to the employees for their input on effective savings. In many cases, employees may even provide ideas for fuelling business growth. These ideas can not only help a company to survive a recession, but also enable the employees to feel valued within an organization.
