A growing number of U.S. companies are facing hiring freezes, budget shortfalls, and even bankruptcy. As a business owner, the effects of a recession are often outside of your control. That said, there are still steps you can take to mitigate the consequences. Companies that include a technology franchise have enacted these measures with real results.
Here’s our list of five methods to run a recession-resistant business:
1. Diversify your marketing
No matter what industry you’re in, your customer base should be your top priority. But how do you retain and even increase this base when so many other businesses are facing the same crisis? The most susceptible businesses in a recession are the ones that rely on only a few streams of revenue. Even riskier are the businesses that serve just one or two big customers. By diversifying your customer base, your revenue contracts will grant you more flexibility.
Because a recession affects industries in different ways, your marketing plan should cover different industries. In a technology franchise, your clients could include travel agencies and healthcare providers. Chances are high that your tourism customers will take a hard hit in a downturn. Healthcare providers, meanwhile, will still be in demand.
Furthermore, while it can be tempting to cut marketing costs, that can do more harm than good. You can’t grow your business if your customers can’t connect with you. Counting on current clientele to stick around is a dangerous gamble. Instead, you should maintain your marketing budget for at least three months into a recession. Track your profitability on those ad campaigns to see if you’re getting a return that makes economic sense and adjust accordingly.
2. Monitor your budget
Professional financial consulting is critical for running a company that’s ready to survive an economic downturn. Entrepreneurs rely on early warning systems to inform them of the possibility of a recession. Networking, business partnerships, and advisory audits are a few ways to enhance your monitoring.
Technology franchise entrepreneurs generally achieve this by setting up a cash flow planner. To do so, use a spreadsheet to record weekly projected revenues and expenses for the next 3 months. This will allow you to get a handle on pending payments and future invoices. You can then prepare for periods of tight cash flow, client leads, and payroll limitations.
We also recommend setting up a financial dashboard for the key performance indicators of your business’s growth. Keeping tabs on your finances allows you to see get ahead of a recession and react quickly.
3. Invest in training
It’s easy to get comfortable with products or services that have been successful in the past. However, revising your usual products or service offerings may be the key to weathering the next recession. Successful technology franchises, for instance, typically offer remote support and expanded hours to quickly adapt to market changes.
You might not even have to go back to the drawing board to fulfill this step. Instead, you should first explore the option of repurposing your products for another market. For example, automotive manufacturers could pivot to creating ventilators for hospitals.
Similar to marketing, employee training is another investment that can set you apart in a crowded field. To prevent your sales team from unnecessary hurdles, you should revamp your company’s training focus. For example, a technology franchise might dedicate an additional half hour to a sales strategy meeting. At these types of conferences, your team can brainstorm ways to improve your business continuity plan.
4. Expand to new locations
National expansion is another great way to diversify your business. If your sales ever dip in one location, you may be able to make up the deficit at another. The build-up to opening a new office should always involve a staffing boost as well.
It may sounds counter-intuitive to continue hiring hire when your competitors are reducing their workforce, but a recession can actually attract great talent. Employees of a technology franchise are one such workforce that directly benefits from increased staffing.
The worst-case scenario for businesses during a recession is, of course, bankruptcy. It’s inevitable that some businesses will institute lay-offs to delay this outcome. In a 2009 Hewitt Associates survey of 518 companies, 70% of respondents claimed they were considering furlough orders. As a result, this frees up some potentially well-qualified candidates for other, better-positioned hiring managers. More often than not, great potential hires may be looking to leave their current organizations due to downsizing, lack of benefits, and wage stagnation.
5. Create a business continuity plan
Many recessions demonstrate that you can’t be expected to prepare for everything. But that’s why it’s crucial to run through your business continuity plan ahead of time. Consider scenarios like extended sick leave, loss of clients, and technological limitations. The variety of disaster recovery scenarios you map out will increase your business’s chances of survival. A transparent plan with SMART goals (specific, measurable, attainable, relevant, time-sensitive) will keep your business on track even as economic circumstances deteriorate.
The best business continuity plans will shed light on your company’s change of command, budget priorities, and staffing obligations. Working from home might be a factor. Cutting back on software or services to keep your staff at full capacity could be another. However you form your plan, share it with all senior management to implement quickly.
There’s absolutely nothing that will make your business fully resistant to a recession. Some industries are built to fare better than others. But by using these recession preparation tips, you can get a head-start on companies who would otherwise be improvising their response. And if you’re open to branching into a technology franchise, you could even start with these advantages right away. That’s one business model that’s compatible with any background – no I.T. experience needed.
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About Cinch I.T.
Since 2004, Cinch I.T. has been providing customer-focused I.T. support for businesses of all sizes. Every element of its support provides not only the best I.T. solutions, but also the fastest and friendliest network and computer support in the industry! Cinch consistently ranks as a top-performing technology franchise with locations in multiple states. To learn more, visit cinchit.com. For more information about franchise opportunities, visit cinchfranchise.com.