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There has been so much talk about a looming recession, and with layoffs in the news and the GDP dropping, it’s easy to see why. In this episode, I’m sharing the most efficient ways you can prepare for a recession in your business to not just survive, but perhaps even thrive through it. I’ll even be sharing what my multi six- and seven-figure clients did to survive the Great Recession in 2007-2009 and how they used it to their advantage.
In this episode, you’ll learn:
0:00 - Are we in a recession?
4:22 - Why recessions are a normal part of the economic cycle
10:02 - How a recession could be an opportunity for your business
17:51 - How to prepare for a recession
18:08 - Why you need to build a cash cushion AND invest your money
23:54 - Diversifying your lead sources to avoid a sales slump
27:03 - Looking at your contracts and re-evaluating your policies
28:34 - Creating a plan for the best and worst case scenarios
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Key takeaways from the episode:
Although the idea of going into a recession may induce some panic or anxiety for you, keep in mind that recessions are a completely normal part of the economic cycle, and they aren't all going to be as bad as the Great Recession was.
Some of my clients were in business during the Great Recession, so I've asked them how they fared during that time. Their answer? It was actually an opportunity for them to really hone in on what worked well and made them money, and let go of what wasn't. Lots of their costs ended up decreasing - things like labor, gas, equipment, and real estate. They were also able to pick up market share when other businesses in their industry didn't make it.
Here are a few things you need to weather a recession:
Your cash balance - We want to have enough cash on hand to cover about 2-3 months of expenses for your business and 6-12 months of your personal expenses. Don't hold on to much more cash than that, however, because high inflation will erode your cash value.
Diversify - Don't put all your eggs in one basket in any area of your business, including your lead generation sources, your products and offers, delivery methods, client industries you work with, and price points.
Evaluate your contracts and payment methods to make sure you're covered in the event one of your clients doesn't pay!
Create a plan for the best and worst case scenarios so you know what you'll do no matter what happens to your business.
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Resources mentioned in this episode:
Listen to Episode 18: Building a Business That Brings Ease, Energy, Earnings, and Equity with Jessica Lackey
I’m Sarah Young - a CPA, Virtual CFO, and the Owner of Young + Co! I have over a decade of experience in helping entrepreneurs scale their businesses and build wealth at the 6- and 7-figure levels, and I started the Profit + Prosper podcast to help you do the same. Profit + Prosper is a business finance podcast created to help entrepreneurs build their wealth in a way that’s fun and empowering. This is NOT a boring numbers podcast - I will share tactical tips to increase your profit so you can truly prosper in your business and in life. I hope you’ll subscribe so we can Profit + Prosper together!
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