Whether you’ve been in business for quite some time or your endeavor is relatively new, preparing for revenue ebbs and flows is key for long term profitability and growth.
For some industries, these cycles are expected and can be accounted for. For many small businesses, however, social and economic uncertainty can have a significant impact, as we’ve seen over the past few years with the onset of COVID-19 and now with inflation and higher interest rates increasing the chances of even more instability.
Here’s how you can prepare your small business now to weather an economic downturn.
Lean on Past Learnings
If your small business was impacted—positively or negatively—by the pandemic, you likely had to adjust your daily operations, vendor management and relationships, and how you reach and provide products and services to customers.
Thoroughly review the changes you made and assess what may apply if a downturn similarly affects your business. Part of this review process should be surveying your employees and customers to gain their perspective as well, then make your adjustments with their feedback in mind.
Re-engineer Your Business Model
Take what you’ve learned from your review and assessment and put strategic plans into action before your small business begins feeling any financial impact.
While you may not be able to predict exactly when or to what extent a downturn might affect your business, staying ahead of the curve and revamping your business model may ultimately be necessary to thrive long term.
Don’t wait for the impacts to come to you—use this time as a good mid-year checkup and act now.
Revisit Past Partnerships
Did you partner with other small businesses during the pandemic or a previous economic downturn to help you both drive revenue and retain customers?
Now is a great time to revisit those relationships and collaborate on building a path to sustaining or even increasing revenues, cash flows and customer bases.
Talk to Your Banker and Accountant
Next have thorough conversations with both your small business banker and your accountant. Lean on their expertise and knowledge of small business finances to position yourself and your business on solid ground during a downturn.
There may even be opportunities for your business to generate additional cash flow and good returns on investments through small business or U.S. Small Business Administration loans, cash management services and techniques, or reinvesting your cash reserves back into the business now.
Consider Small Business Grants
Small business grants can also be a great way to infuse cash into your business, and there are several resources to identify and apply for them. Check with your local government agencies, small business incubators or chambers of commerce, and local and regional nonprofit organizations to find out which grants you may be eligible for.
Taking a long view on your business’ success while simultaneously preparing for a potential downturn in the shorter term can not only help your business survive, but even thrive with a few intentional, strategic steps. Lean on your financial team to help identify a path based on your needs and business type.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.