It’s not here yet, but signs of the next recession are already showing. Nearly 40 percent of top economists expect the Federal Reserve to cut interest rates (a major sign of an impending recession), while the growing tension between the U.S. and China are sounding financial alarms.
The economy as it is now is sturdy and promising, but that doesn’t mean that a recession is completely off the radar. Recessions are a natural part of the economy’s ebb and flow, but without proper preparation, your business may encounter a multitude of challenges that will make it hard to get by.
Here’s how you can prepare your business strategy for the next recession — whenever it may be.
Invest in Your Brand Identity
When a recession hits, everyone’s purse strings tend to tighten. You can avoid price wars by building a better, stronger brand identity now that will help you draw equity in the downturn. People who are attracted to your brand will be less likely to change, especially when you build your brand on the value you bring, the relationships with your customers, and the total customer experience.
Create a Healthy, Sustainable Workplace Culture
Happy employees will be the key to your recession success.
Employee engagement is always a priority, but it’s especially important during rocky situations like a recession. Employees want to feel confident they will continue to be employed, even when times are tight.
They may have to take on more responsibilities or be asked to do more work with fewer resources. Without a strong workplace culture, you could face high attrition costs in a time when every dollar matters.
Build Cash Reserves
Start cutting back on spending now.
During a recession, you may not have as much available cash to spend when a good opportunity comes along. Start building your cash reserves that will help you get by when not as much money is coming in.
One of the easiest ways to do this is to right-size your workforce. See where you can go lean on labor, get rid of low performers, and make cutbacks that won’t affect your ability to serve your customers. Doing this before a recession hits not only gives you a way to stockpile some cash but also helps to preserve the workplace culture since people aren’t getting laid off at critical times.
Focus on Your Core Customer Base
Recessions are not times when you should be trying new things. You can keep a healthier bottom line by focusing on the core customers you already know will buy from you. This gives you an opportunity to forge stronger relationships with your customers and get to know their needs. This may open up new opportunities for revenue without having to take on the risk of trying something new.
It’s not a matter of if there will be another recession; it’s a matter of when. We likely won’t see the likes of another Great Recession as we did a decade ago, but it’s still a good idea to take lessons learned and apply them to the current business strategy and mitigate the potential fallout while you still can.