How Should You Prepare Your Business for a Recession?

Matt goes over an article titled “4 Things You Should Do to Protect Your Business During a Recession.” While Matt agrees with these four things, he also has a different take. Make sure to watch this to help not just prepare for a recession but grow your business in general. 

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript: 

I wanted to talk for a second about an article that came across my desk that I thought was kind of interesting. Interesting in the way they take it. And interesting in the way then I review it. So the article is called 4 Things You Should Do to Protect Your Business During a Recession. Presumably, this is something they’re thinking is maybe an imminent issue that could be coming up. That the US could be heading into a recession. Personally, I don’t think that’s the case. But what’s interesting to me is the four things they tell you to do if the economy was headed to a recession to help protect your business are things I think you should be doing no matter what. Even if times are good. Even if things are going well. Even if you know you have plenty of growth in your business and you’re not worried about a recession. These are all things you should be doing anyway. So their tips are: strengthen customer relationships, optimize cash flow management, enhance operational efficiency, and invest in employee engagement. Well, okay, yes, if I’m heading into a recession I definitely wanna make sure that I’ve got my customers locked in. Hopefully, they love me they’re not going anywhere. Even if times get tougher I won’t be one of the costs that they cut. I wanna make sure that I’m collecting on invoices. And have terms with my vendors so I have plenty of cash. And I’ve got a cash cushion. And I have good margins. And I wanna make sure that I’m not wasting money operationally. I’m not doing things  in a wasteful way. I’m being as efficient as I can. And I wanna make sure that I’m minimizing my employee turnover. And I have them doing their best work. Engaged and optimistic about the future. And wanting to stay and not look for other work. And not be disappointed in how much I’m paying them or how well I’m training them or what growth opportunities I’m giving them. But those are all good things to be doing no matter what the economy is doing or what the business is doing. Those are all good things to do regardless. And that way even if there is a recession coming you’re not scrambling trying to do these things. You’ve already got them all in place.

It’s a lot like when people say “What should I do to get my business ready to sell?” Well, these are all the same things. You should, you know, be delegating work and be running things with a management team instead of having the owner doing everything. That hurts the value. You wanna get rid of old inventory you haven’t sold. And you know cancel software subscriptions you’re not using. And make sure your staff is right sized for the size that you are. You don’t have fewer people than you need and you don’t have more people than you need. You wanna make sure you don’t have a high customer concentration. Where one customer is 20 or 30 or 40% of your revenue, right? Cause if that customer leaves, you’re gonna be in big trouble. So those are all things you do before you sell to try and make your business look as good as possible. But there are also things you should do anyway. No matter what. Even if you’re not planning to sell the business for another 5, 10, or never number of years down the road. So that’s the same thing with things you should do to protect your business in a coming recession are things you should be doing anyway. So the article I think is helpful I guess in these are reminders of things that you should be doing to make your business run as well as it can. But it shouldn’t just be about getting through a recession. You should always be doing these things as a business owner. Always working on optimizing the business. Optimizing cash flow. Optimizing customer relationships. Optimizing employee relationships. Those are all good things to be doing all the time no matter what’s coming. If you’re not doing them now put them on your to-do list regardless of whether a recession is on the horizon. Start working on them. and you know small incremental steps. Small improvement every day gets you to where you wanna be in the long term no matter what happens.