5 Survival Tips that Might Help Your Small Business Survive a Recession

Surviving a recession takes some strategy. Small businesses have an especially important place in the economic landscape. They are the backbone of many economies, and are a prominent force in the American markets.

Small businesses don’t have huge bank accounts to survive recessions with, but they do have more flexibility and adaptability than larger corporations. Additionally, they tend to have smaller operating budgets.

There are a few things small businesses can do that will improve their performance in difficult markets. Here are five of the best ways to beat a recession.

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Invest in a Great Finance Team

More expertise gives your business an edge. Make sure that you have people acting in your business’s interest who understand finance well. Recessions are difficult markets, but it’s not impossible to stay afloat or even make money.

With a sound finance team, you can get better advice on how to remain flexible in a challenging market. There is simply no substitute for experience.

Advisors can help you with things like wise cost-cutting, where to spend your limited dollars, and product or service alternatives that will help you business stay in the game.

Even if you can’t retain a finance team full-time, you should get advice per diem periodically in a recession. It’s like going to the doctor’s office. Don’t just wait until you are super sick! Get a checkup for your business before a serious situation occurs.

Good financial advice is related to your business size. Make sure that you retain someone who understands your unique market niche. They should be an expert in small business, not a generalist. Small business challenges and capabilities are unique.

Invest in Forex While Avoiding Capex

If you have the budget to do a little investing, put your money in forex during a recession. You should avoid capex, which is impacted by printing cash.

Investing in foreign exchange gives you a bit of an advantage because many people are forced to work with companies that operate in smaller countries when recessions hit. They have to outsource.

Forex can be risky if you don’t know what you are doing. Hedge your bets by investing with a solid advisor. This is a great move if you truly have the money to invest, because you stand to gain as production accounts are moved offshore.

Forex also makes gains in recessions because people can afford to work in the international scene when a recession hits. Wages and bids are less competitive, and companies are more likely to branch out across country borders.

Forex is a bit complicated, so do your research thoroughly and get some help. You don’t have to be an expert to make gains in the market during a recession, but you should be making well-informed decisions.

Cut Overhead

Everyone seems to be forced to do this during recessions and pandemics, and it’s not a lot of fun. However, you can keep your business afloat by keeping your employees on your payroll during pandemic and recession period by availing the benefits of employee retention credit program. Some people who have been in business a while know that many business owners’ preference  would be to cut wages in a small amount rather than laying people off.

Unfortunately, that isn’t the way economics works. You will likely have to cut hours for certain workers or make layoffs. If you cut wages, those working may not be able to keep up with their expenses. When you make a layoff, at least people get a chance to work a good job.

While these decisions are difficult, you can minimize the financial impact on your company by making the necessary cuts before your company goes into the red. By working toward conserving expenses, you stand a much better chance of preserving more jobs overall.

Recreate Your Offers

There are a lot of services and products in the small business market. From beauty shops to lawn care, people create all kinds of offers for their customers. In some cases, they are competing with big business.

But in others, small business dominates the scene. To remain competitive in either case, you have to reassess your business budget and your customers’ budgets.

If you previously offered all-in-one lawn care services, realize that people may not be able to afford the whole package in a recession. Consider making people a deal for weekly or monthly services that will help them save money but still give them access to your company.

The challenge for many service-based businesses is to stay relevant in a recession. People naturally try to cut out additional expenses like manicures and massages when paychecks get smaller. You can stay in the market by creating competitive offers that meet people’s budgets.

They won’t likely be able to get manicures every week, for example. When they go, they may not be able to afford the fanciest gel options.

In these types of cases, a good response might be to offer bulk pricing on economy manicures. Salons could also stock up on the latest colors or try out a new treatment to entice buyers.

Offer Luxuries

You may be thinking that this is counter intuitive. People likely can’t afford luxuries during recessions, right? Well, actually that is wrong. They cut down on larger luxuries, but they make limited purchases of small luxuries.

Small luxuries are things like customized paper goods, small personal care products like specialty lotions, and accessories.

For example, rather than buying head-to-toe designer or even mid-range clothing, a savvy shopper during a recession might focus on designer scarves or high-end vintage jewelry from a second-hand store.

The market for small luxuries increases during a recession because people still need to treat themselves well in times of stress. People also like to give gifts to those they hold dear.

When they can’t afford larger things or it isn’t prudent to buy a lot of gifts, small luxuries are a smart buy.

By staying flexible and savvy in your business dealings, you can create relevant offerings that are within your customers’ budgets.

Combined with good financial oversight and investments (if you’re in a position to make them), your small business stands a much better chance of surviving a recession.