The Black- and Brown-owned Business Growth Program (B-Cubed or B³) connects underserved entrepreneurs with the resources needed to succeed.
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TO: SBDC Network
FROM: MD Austin
SUBJECT: Defending Small Businesses Against a Recession
As the debate continues as to whether the US economy has entered a recession continues, at some point in time a slowdown will occur. Currently, economic handicappers believe that there’s at least a 45% chance of a recession within the next year, and some are forecasting that inflation could morph into stagflation, a condition that few if any small business owners have ever negotiated.
To better prepare for the likely slowdown, industry experts offer the following advice:
- Determine if your business needs to cut costs. Some firms may find ways to grow, especially if they find the margins in their core business have shrunk.
- Don’t over-react. Take a sober look at the economy and where your business sits, and then make appropriate changes.
- Take a look at all your costs. This may include using your SBDC advisor to assist with generating projections, forecasting, analyzing cashflow, and more to determine whether the firm can remain solvent during a downturn and to also calculate which expenses can be reduced the easiest.
- Labor costs are generally one of the firm’s primary operating costs. Be sure that the business can be cashflow positive based on various staffing levels. Also consider outsourcing work if you cannot find qualified employees.
- Try to be a “price maker” and not a “price taker”. Examine whether you need to seek out alternative supply sources to control costs. Also, be sure that your key employees are properly compensated.
- Don’t let emotion play into having to make tough decisions.
- Look to the future, which involves generating a range of projections based on different set of assumptions. Look at the business from a “worst-case” scenario and plan ahead.
- Check with suppliers to be sure they can provide you with the items you need to operate and set up alternative sources if there are concerns with your supplier.
- Examine your prices to find out how much and which items can be increased and by how much they can be “bumped up”. This may not cover all your costs, but any contribution to cover costs is positive.
It is likely that there are other ways to prepare for a downturn in the economy. However, the primary focus of clients should be to carefully examine all segments of their operation to see where they can cut costs, etc., to remain viable regardless of the changes in the economy. Consulting your SBDC advisor for assistance is a great place to start. Contact us to get started.
The Virginia Tourism Corporation is offering a reimbursable grant program to assist small tourism-related businesses and bolster visitation.
Increase your business and personal financial wellness with the interactive, easy, and free resources available from Banzai.
Great business stories abound all around the Shenandoah Valley, so join us each month as we gather them all in one place!
Business Advisor Jalal Maqableh provides important tips for small-business recovery after the COVID-19 crisis.
Great business stories abound all around the Shenandoah Valley, so join us each month as we gather them all in one place. Blogs, podcasts, video series, and more!
10 Jokes Every Small Business Owner Will Identify With
- Nothing ruins a Friday more than an understanding that today is Tuesday.
- Experience is what you get when you didn’t get what you wanted.
- The human brain is a wonderful thing. It starts working the moment you are born, and never stops until you stand up to speak in public.
- I get plenty of exercise — jumping to conclusions, pushing my luck, and dodging deadlines.
- If every day is a gift, I’d like a receipt for Monday. I want to exchange it for another Friday.
- I’ve started a small business building boats in my attic. Sails are going through the roof!
- A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort.
- ‘You all worked really hard this year, I’m giving you all a check for $2,000. If you work the same next year, I’ll sign them’.
- Why do banks have drive thru windows?
So the cars can meet their real owners.
- The proper way to use a stress ball is to throw it at the last person to upset you.
What is business agility and why is it important in starting and growing a business? Veteran SBDC Business Advisors weigh in on how to know if your company is agile and what to do if you want to build more agility into your business operations.