Try these 5 ways to make your business recession proof

It’s undeniable that the last two years have presented countless tests for businesses, many of whom have not survived. However, the pandemic also proved that innovation can be born even during the darkest times, with a record number of startups launched over this period.

Unfortunately, with recent inflation and a looming recession, business owners are faced with uncertainty once again. However, this time, founders have a toolkit of resilience to draw upon to endure what’s ahead.

Despite this, remaining agile and being as prepared as possible can prove challenging. So what can you do to ‘recession-proof’ your business? Here are a few tips to help.

1. Get back to basics

When times are tough, leaders must tighten their belts to ensure the business stays afloat. Australian startups have recently been haemorrhaging staff in a bid to do this. However, starting with non-essential services or spending should be your first step. Take a look at your expenditure and cut any services which are ‘nice to haves’ or that you can do yourself. Likewise, you may need to cut back on department budgets in the interim until the market stabilises. With most businesses now operating in a hybrid model, it might be time to consider whether paying for an entire office for a percentage of the week is really worth it.

2. Understand what you need to survive a recession

Getting to know your business numbers intimately is essential during difficult times to understand exactly how much money you need to survive. If you’re unsure of this, you won’t be able to budget or make cuts accordingly. Likewise, you may be able to survive on less than you think if you’ve made adequate amendments. If you have one, consult your accountant to create a financial plan through the recession. For example, you may find the business can operate at a loss for a certain period and though not ideal, could see you through to more stable times.

3. Look for opportunities to reach new customers

If it’s clear that the services or products you’re providing are no longer necessary, it might be time to pivot the business. The best startup founders continually grow and change their ideas despite the difficulty. So, take an honest look at your business and see if you could implement any changes to attract more customers. An example of this came from the first lockdowns when distilleries around the country started making hand sanitiser. While many have since returned to profitable alcohol businesses, this quick pivot helped many smaller businesses maintain some profitability during the pandemic.

4. Support your staff: recession is scary for them too

This year has brought rise to a great debate surrounding workers’ wellbeing and happiness, with the Great March Resignation leading thousands to quit their jobs. However, with a global recession looming employment stability is now uncertain, causing anxiety amongst many. Employees are the backbone of any business, and especially so in tight-knit SMBs. Therefore, as leaders, it’s our job to ensure the people behind the brand are protected. Rewarding loyalty and hard work are important during trying times to give your valued employees a sense of stability and economic safety. If possible, try to openly communicate what is happening with the business, its economic outlook and your employee’s positions. If things do look dire, speaking with your staff about their options might highlight other avenues, such as reduced working hours or other work/life incentives, that may help the business.

5. Safeguard your health

Business founders face immense stress, particularly during challenging business and economic times. Therefore, it’s vital that you put measures in place to safeguard your health. Be ruthless about how you structure your day. Ultimately, if your mental or physical health falters you put the entire business at risk. Therefore, even from a practical standpoint, looking after yourself is good practice. Though it may seem counterintuitive when you’re hustling to survive, sometimes stepping away from the business can provide you with some much-needed rest and perspective. Good ideas rarely come from stress or exhaustion, so it’s in your best interest to put yourself first right now, for your staff and your brand.

Though there are no guarantees when it comes to running a business, tenacity and resilience are key to making it through trying times. However, it’s okay to admit vulnerability or weakness and practice kindness to yourself as a founder right now. Owning your strengths and weaknesses will make you a stronger, more compassionate leader through the ebbs and flows of life and business.

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