Last week we covered protecting cash flow, reducing unnecessary expenses and more. Here is the rest of the list of how to protect your business from a recession.
6. Maintain strong communication
During a recession, communicating with confidence is as important as ever. Employees may wonder about the stability of the company, the safety of their job or how daily operations could change. Always maintain strong communication, when preparing for a recession. Without honest, accurate information, employees may make assumptions—many of which are likely incorrect. This can lead to fear and premature turnover as employees look to other options to attain the security they need. Be as transparent and authentic as possible with your staff.
7. Promote the Employee Assistance Program
If you have an employee assistance program (EAP) as part of your benefits program, remind your team of the EAPs’ short-term counseling, referrals and other mental health services to help anyone having challenges with work-life balance. It’s a confidential resource that can help employees process any changes or learn effective ways to manage anxiety.
8. Offer financial tools to employees
While it’s unlikely that small businesses entering a recession can provide financial help to their staff, resources and guidance, such as retirement or 401(k) can go a long way. If your company has this, encourage your employees to utilize it and offer them assistance in setting it up and making sound financial decisions.
9. Strengthen your team
It’s always important to continue strengthening your team, whether or not you’re facing a recession. Take the time to reaffirm your mission, vision and values to help your employees feel valued and connected to your company. Remind them why they chose your company and ask for their commitment to the path forward through the ebbs and flows. When employees feel connected to a larger purpose during economic hardships, they’re more likely to stay committed to overcoming challenges.
10. Evaluate business relationships
The driving force of success behind any business is relationships—particularly with their clients. Loyal customers may reduce their spending, but if you have a good relationship, they’re likely to stay committed to you and not turn to competitors. Continually evaluate your business relationships and take the time to build meaningful connections. This should include everyone from customers and prospects to employees and suppliers. Always work to strengthen stakeholder relationships throughout your company, regardless of the state of the economy. Consider divesting products or services that are no longer performing.
If you find that most of your business comes from one or two clients, it’s a good idea to consider expanding your services to new prospects. This helps reduce the risk of eliminating your cash flow if one client pulls back on spending during a recession. Another action item is reviewing how you evaluate the creditworthiness of clients and customers. If you do business with individuals who may not be able to pay their invoices, it may cause problems for you later.
11. Look for new opportunities
Every recession presents a unique opportunity for businesses to expand and diversify their offerings. Try to think of innovative products or services you can promote to expand or diversify, without raising business expenses. Leverage technology or automation to improve business unit economics. Keep an eye on what your competition is doing, maximize organizational efficiency and explore new markets.
When the world outside of your company is changing quickly, it’s important to protect your business. To help maximize operational efficiency while keeping business expenses down during a recession, consider partnering with a PEO (professional employer organization). They can help SMBs drive growth, reduce risk and save money, which is especially critical in a recessionary period. On average, PEOs bring 27% annual return on investment and $1,775 savings per year, per employee. TriNet is a PEO that offers full-service HR solutions to SMBs tailored to specific industries. Gain peace of mind with our compliance and human capital experts during recessions and beyond.