Preparing Your Business for Recession

Now is the time to make plans in case an economic downturn is coming down the road

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In some respects, the pandemic feels like it is finally in the rearview. And yet, the fallout from the pandemic continues, including a considerable amount of financial uncertainty and disarray.

Amidst soaring inflation rates and especially high gas prices — phenomena aided and abetted by violence in Ukraine, supply chain disruptions, and countless other variables — many economists now suggest that a recession sits just around the corner.

It remains to be seen whether this dire prediction comes true, but it certainly behooves small-business owners to prepare for even the worst contingencies. What steps can you take to prepare your company for a possible recession?

1) Amass a cash reserve.

Ideally, your business will have enough cash on hand to weather any business downturns or other economic disruptions. How much cash should you stockpile? It really depends on who you ask, but a good general goal is six to 12 months of operating expenses.

At the same time, keep in mind that stockpiling too much cash is a real problem, because that’s money that isn’t growing in a bank account or stock portfolio somewhere.

2) Be attentive to cash flow.

Another important step is to safeguard the cash coming into your company. One way to do this is by communicating frequently and directly with any partners or customers who owe you money. Also be sure that you have robust and consistent invoicing processes in place.

3) Establish creditworthiness.

If worst comes to worst, you can always borrow some money to help weather financially fallow periods. For this to be an option, you’ll need to maintain your creditworthiness. Be sure you pay your creditors as expediently as possible.

4) Examine your operating costs.

Another way to make it through a recession is to take a close look at your operating costs and decide where cuts can be justified. There may be some low-hanging fruit: Look for a cheaper office supply vendor. Renegotiate your lease. Think carefully about the services your business truly needs in order to survive.

5) Keep an eye on your inventory.

Be sure you have sufficient inventory to serve your customers consistently, without simply stocking up on supplies or components that languish on your shelves. Now’s a great time to talk with your suppliers to ensure you have an inventory control plan in place.

6) Don’t stop marketing.

During hard times, it may be tempting to cut out “inessential” spending, like advertising. But of course, marketing your business isn’t inessential at all. A recession may be when you need it the most, reminding customers that you’re still there to help with their home service needs.

With any luck, the rumors of recession will prove overblown. For now, though, it makes sense for businesses to prepare for the worst. Start recession-proofing your business as soon as you can.

About the Author

Amanda E. Clark is the president and editor-in-chief of Grammar Chic, a full-service professional writing company. She is a published ghostwriter and editor, and she's currently under contract with literary agencies in Malibu, California and Dublin. Since founding Grammar Chic in 2008, Clark, along with her team of skilled professional writers, has offered expertise to clients in the creative, business and academic fields. The company accepts a wide range of projects; often engages in content and social media marketing; and drafts resumes, press releases, web content, marketing materials and ghostwritten creative pieces. Contact Clark at


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