Wouldn’t you love to get clear answers on today’s economy? Are we, or are we not, in a recession? If we are not currently in a recession, is one inevitable for 2023?

This may not be the clear answer we need, but it turns out, according to MagnifyMoney, that around 70% of Americans polled in July of 2022 believe a recession is coming. This is very frightening for business owners still in recovery from the COVID-19 pandemic.

Can we control the situation? Unfortunately, no. But we can prepare our businesses by taking some essential steps. And we should start today.

Preparing Your Business For Recession

Protect Your Cash Flow

Cash flow mismanagement causes many businesses to fail regardless of the economy. Therefore, it’s vital to protect your cash flow by following up on past-due invoices from clients and creating an emergency savings fund. We recommend keeping an emergency fund to cover three to six months of expenses.

Control your receivables with legal contracts regarding late fees. This will reduce the risk of unpaid outstanding balances. It would help if you also considered collecting deposits for high-paying jobs upfront to reduce the risk of non-payment.

Reduce Unnecessary Expenses

We recently posted a list of 15 tips to help business owners review and reduce their expenses. It’s time to take these steps very seriously in preparation for 2023’s uncertain economy.

Your largest expenses are most likely payroll, payroll processing, and benefits. Our professional Human Capital Management (HCM) platform can help cut unnecessary expenditures and decrease overhead costs, such as your Workers’ Compensation premiums.

Taking steps to reduce operating expenses and increase efficiency will add stability as time passes.

Closely Evaluate Staffing

Here are the questions you should ask yourself regularly, especially in uncertain financial situations.

  1. Do you have the right leaders in place and trained to help you navigate through a recession and maintain focus on the goals and priorities of your business?
  2. Is your team productive and efficient, or are there process improvements that could increase performance while saving money?
  3. Is your team honest? Surprisingly enough, employees cause 90% of theft losses.  One in four admits to lying about time worked vs. time recorded. Work with your management team to put measures in place to prevent theft.
  4. Are there tasks and functions that could be outsourced, allowing you to reduce administrative staff?

Retain Top Talent

Invest in your employees to reduce expensive turnover. Here are some tips:

  1. Improve communication to dispel rumors.
  2. Implement an employee wellness program.
  3. Show empathy and be as flexible as possible.
  4. Make sure your employees know about their benefits and offer more if you can.

Improve Efficiency

Every department manager should work with their employees to conduct a thorough workflow analysis. Document the process flow for each task and weed out all redundancy and unnecessary steps.

Automate where possible. For example, do away with paper timesheets and use a web clock that integrates with payroll. (This will help take care of time theft.)

Improve software integration. Your staff should never need to input data twice. Make sure systems are connected and data flows seamlessly.

Protect Your Business Relationships

It’s essential to nurture your relationships, especially with clients. Your most loyal customers may reduce spending out of necessity, but if you maintain a good relationship, they are more likely to stay with you.

Increase your network and build meaningful connections with customers, prospects, employees, and suppliers. These connections can help build your business even in the most challenging times.

Look for Opportunities

A recession always creates a variety of needs for your potential and existing clients. Find out how you can add value or change messaging to meet those needs. Watch what your competition is doing and do better. Listen to clients and respond.

Increase Business Agility

According to Monday.com, “Business agility is the ability to make quick, sudden changes when you identify new customer or market needs. That agility must occur at all levels of an organization.” Read more.

Be ready for anything, basically. Examine your culture, leadership, and governance methods, AND make sure you have digital collaborative technology in place. Examples are cloud-based timekeeping, record keeping, payroll, and our remote LMS.

Ensure that all employees are well-trained, equipped, and able to adapt quickly to change.

Increase Marketing

Take advantage of every opportunity to get your logo, name, and services noticed online and off. This could include networking, as mentioned above, content marketing, social media marketing, email marketing, and more, all of which are very affordable methods of getting noticed.

Secure Financing

The decision to go into debt shouldn’t be taken lightly, but even with today’s high interest rates, business owners should consider securing financing before they need it.

Moving Forward to Face the Giants

We may ring in 2023 with gigantic uncertainty, but don’t we always? And who doesn’t enjoy a good challenge, honestly? Regardless of what the new year brings, these tips, along with our HCM tools and services, will help make your business sustainable. Get your free consultation today.