A hot topic among small business owners is that a new recession is coming or the country is already in a recession. With inflation being so high, but unemployment so low, some economists want to change the definition of a recession (two consecutive quarterly drops in GDP). The recent decrease in the monthly unemployment rate only confuses the situation when a lot of big tech companies like Amazon and Spotify are laying their employees off.
On The Small Business Radio Show this week, Gini Dietrich, the founder, CEO, and author of Spin Sucks explains what we can do now to prepare for the next recession no matter when it come to small businesses. She has run and grown an agency for the past 15 years. She is also co-author of “Marketing in the Round”, co-host of Inside PR, and co-host of The Agency Leadership podcast.
Gini bases her advice on how unprepared she was during the Great Recession of 2008 where she had to let go most of the 30 people in her company. She discusses how to:
- Preserve the cash you have on hand since sales shrink and customers take longer to pay during a recession.
- Manage profitability: find out from your financial statements which sales in your business really make you money.
- Diversify your customer base and revenue streams. Recession usually affects different industries unevenly.
- Identify and maintain your strengths and best customers who will stay with you.
- Be ready to decide what you can stop doing; know when to quit! Find out what is not making money or is just a waste of time. Conserve your financial resources.
- Manage liquidity like you do your profitability. Financial situations can change quickly during a recession so be prepared to be able to find extra cash.