How to Recession Proof your Business
What should I do if my business was closed because of covid? How will my business survive once this recession is over? If you’ve asked yourself these questions, stroll down to learn how to recession proof your business NOW.
Guys, over 100,000 businesses have permanently CLOSED since March 2020 – it’s only August! How is that? How could a business be operating for 3,5, or 10 years and completely get wiped out within 4 months?
LACK OF PREPARATION!
Seriously, there have been businesses operating for over a decade and never prepared for an economic depression or recession. Now, that’s not to say this pandemic or recession is anyone’s fault. No one seen this coming!
However, as a business owner, it’s our responsibility to prepare for the worst and many businesses did not.
My heart sinks to my stomach whenever I hear a small business has to close their doors. When a business closes, thousands of people lose their jobs, and thousands of families are left in financial chaos.
I was one of those families. Back in 2009, both my parents lost their jobs and we had to go into survival mode. I wouldn’t wish that financial pain on my worst enemy. It’s why I’m so committed to helping business owners like you build a long term sustainable business. A sustainable business that can weather any economic storm and any pandemic!
Alright enough about me. Here are 3 ways to recession proof your business:
1 Diversifying your Revenue
If your business can only generate revenue one way, its time to change that. Most business only rely on 1-2 streams of income. If you run a service based business, consider selling industry related products, offer educational courses, or license your business to others in your industry.
If you run a product based business you could offer subscriptions, provide services in your niche, or showcase tutorials of your product and monetize the videos.
When you diversify your revenue, you decrease the chance of running low on cash.
The reason most businesses were hit so hard was because the had very little streams of revenue, and when that one stream of revenue was impacted, they had nothing else to fall back on.
2. Save for Rainy Years, not just Rainy Days
The term “save for a rainy day” is great for personal finance, but not for business finance. In business, you will experience months and sometimes years where business is slow. The difference in personal expenses and business expenses is the high volume and costs, which is why only saving for “rainy days” isn’t effective.
Business expenses tend to be much higher and much more frequent. You need to be able to support your expenses, even during slow times.
There were companies that have been in business for 5-10 years with little to no savings!
My rule of thumb is to save for rainy YEARS, not rainy days because they will happen. The first step in doing this is calculating the average amount you spend per month on operating expenses. Then, make it a priority to save 12-36 months worth of expenses.
Keep in mind, this is not an overnight process or hack. This is a long-term solution that’ll help save your business tremendously during another recession.
3. Invest or Buy into other Businesses
Do you know what the most successful brands like Walmart, Amazon, L’Oréal have in common? They buy into other businesses that will help build theirs.
The biggest corporations invest in other businesses because they know that theirs might not always have a good year.
Most small business owners think they have to have multi 7 or 8 figures to buy another company, but that’s not true.
You can start small and invest into profitable amazon stores or online boutiques in a similar niche as yours. By investing into other companies, it doesn’t mean that you have to run that company too. This could simply mean you invest money into it, and collect profits.
L’Oréal, one of the BIGGEST beauty brands in the world owns over 30 companies! L’Oreal is not a profitable brand because they are popular.
In fact, when’s the last time you heard someone talking about L’Oréal? Chances are you haven’t, but people are talking about the brands L’Oréal owns and invest in which is why they’re so successful.
These tips are not a get rich quick method or something you can do in a few days. These steps are strategic and take time, but they work and are proven to be the BEST methods to building a long term business!
Even if your company was hit hard due to COVID19, it’s not too late to recession proof your business. Entrepreneurs like you never throw in the towel, so don’t start now!
Need help making a financial come back? If your beauty business or salon is struggling, let me know! I work with luxury salon owners, beauty brands and professionals to help them scale their biz to 6 & 7 figures, during ANY economic hardship.
Follow us on Instagram for more business finance tips and advice.
