Getting it right during this economic challenge is the key to your success
In early 2000, a five-year-old online bookseller called Amazon.com sold $672 million in convertible bonds to shore up its financial position. One month later, the dot-com bubble burst. More than half of all digital start-ups went out of business over the next few years—including lots of Amazon’s then-rivals in e-commerce. Had the bubble burst just a few weeks earlier, one of the most successful companies ever might have fallen victim to that recession.
What is a recession? The National Bureau of Economic Research (NBER) Business Cycle Dating Committee—the official recession scorekeeper—defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
The good news is that recessions generally haven't lasted very long. Financial institutions summarize their findings after looking at 11 cycles since 1950. The data shows that recessions have persisted between two and 18 months, with the average spanning about 10 months.
So, what should you do if the data shows we are in a full blown recession?
Timing is everything but consistency wins over and over...
Economic experts are debating whether the U.S. economy is heading for an economic downturn or a recession. Some think we are IN a recession right now. As the debate continues, this is the perfect time for business owners to start to recession-proofing their businesses by making strategic financial plans.
Small businesses can prepare their businesses now for a potential recession by saving, adapting and looking ahead to the future. Some tips to recession-proof your small business include:
Pay off your business debts: Make aggressive plans to pay off your business debts, such as loans and credit card debts, as soon as possible.
Have an emergency savings fund: Set aside money for an emergency savings fund with a three to six months “cushion” to cover business expenses during a recession or other adverse events. The fund will help with the costs of loss of income, employee loss, a lawsuit or protecting a large inventory.
Be more strategic with your marketing dollar and think Long Term: Be ahead of the recession by devoting specific income to consistent Branding. Know your numbers when it comes to determining what you can afford financially to marketing.
Be adaptable: Be aware of the current economic climate, listen to your customers and employees, and conduct the necessary research. Be prepared to pivot or adapt your strategies and offerings based on the changes you see.
Keep investing in the business: Invest in marketing and advertising and seek growth opportunities where possible. Put your emergency funds where they will make the most impact.
A recession is an inevitable phenomenon in any economy. Ultimately, the best thing to do during a recession is not to panic and to focus on long-term financial goals. If you make the right decisions for your organization now, a recession might be a lucrative opportunity for your business.
For over 25 years, Chris Heeb has served the St. Louis area as a local business owner who deeply cares about the community, promoting locally the businesses that supporthis mission, and his Catholic faith.
As owner of Midwest Faith Media LLC and the publisher of Clayton Parish Neighbors and Kirkwood/Webster/Des Peres Parish Neighbors, he is devoted with a joyful spirit to inspire more families to rediscover their faith and toshare their journey with friends and others in their neighborhoods.
Aside from his publishing duties, he is involvedin various activities at Little Flower Catholic Church, enjoys time with his wife and children,and loves to cook for family and friends.