21 Tips for Planning your Business During a Recession

Business

Mar 14

This is a trying time for everyone. Every-single-one of us will feel the economic repercussion of this global pandemic. We are living through a 'wait and see' moment in time and are either self-selecting to quarantine or being forced to stay at home. The countries and communities that are following the social distancing protocol are seeing success in flattening the curve, and in slowing the spread of this deadly disease.

But because of this, many small businesses are losing out on significant revenue. This loss also directly affects waged workers and those that can't afford to take time off. It also minimizes access to essential services for the more vulnerable demographics.

In times like these, we need to come together and help each other. Many small businesses have lost their annual revenue because their events got canceled, waged workers aren't getting paid, or are losing their jobs, and many are seeing sales dwindle as fear sweeps our planet. The markets can't decide what they want to do, oil prices wars are causing wars, and politicians are LYING to help their platform.

Despite this significant change and it's world-changing repercussions, we need to think optimistically. What is the light in all of this? There is much to be thankful for, the first of which is our health, our family, friends, and community. Now, we need to focus on how we can use this time of solitude to plan our business.

Below are some suggestions on how to plan and prepare your business for the coming months:

Move your line of credit: NOW! Banks can reduce your credit facilities at any moment, especially when there is fear in the marketplace. Take the credit you have remaining on your line of credit and move it to another bank. For example: If you have a $100k line of credit at bank A, move that $100k to bank B as cash. You will only have to pay your interest and principle that you will pay from bank B. There is a cost to this strategy, but that minimal cost could prevent you from going bankrupt. Do this for the short term until the market corrects itself. Disclaimer: I am not an accountant or financial advisor, so take this tip with a grain of salt and at your own risk. ;)
Deposit checks/accounts receivables paid: If you have any accounts receivables, get them paid ASAP. Call those vendors/customers today to get paid. If this is something your accounting team typically does, make that their priority this week.
Tweak your business planning: Review your overall plan. What are your quarterly goals? How will they be affected by this pandemic? What can you do today to prepare?
Review all your financials: Make a list of all expenses. Pull up the last three months and understand why you're paying for those things. Are they essential? Will they continue to be needed in the next month or so? How must you correct your sales projections and profit expectations while keeping on eye on a potential market correction? Cancel or pause anything that's not essential.
Figure out how to help your customers: What can you do today to help? Do they need a confidence boost, a hug, a phone call? Reach out and show them you care. Even if they decide to pause or cancel, know that it's in their best intention. Keep in touch and create a plan to get them back when things turn around.
Focus on your core competencies: Cut any new projects and reinvest into the things you know are working. Ad spend not converting? Live masterclasses losing attendance? Take note of the things that aren't performing and refocus efforts on the few things that are.
Don't cut back too much on marketing: When every else is pausing their marketing budget, you'll get more reach! Consumers still want to buy, so you need to remain top of mind
Reduce risk: If you have inventory, sell it. If you have software you barely use, pause it. If you have too much overhead, find creative ways to reduce it.
Document systems: Create (or complete) your companies playbook, Re: Ops Manual. Document production, methods, procedures, templates. Marie Kondo the shit out of your systems.
Presell Contracts/gift cards: Get cash upfront for the whole project even if you have to sell it at a discount. For restaurants/salons/shops, you can presell gift cards. For service providers, you can presell packages at a discounted rate for future projects.
Negotiate with landlords: Try to defer payments or get out of any unnecessary leases.
Banks: Negotiate interest-only payments on loans. Call your business banker today and be ahead of the game!
Simplify contracts: Negotiate longer payment terms for any invoicing or contracts.
Pay off debts: But don't take on anymore and PROTECT your cashflow. Use this time also to negotiate better terms with your vendor/supplier. Net-30 or longer is reasonable.
Increase your credit: Apply for the maximum line of credit/credit limit you can get (but don't spend it!)
Strengthen your community: Encourage your people that things will turn around. It sucks-ass right now, but there is a fundamental reason this is happening. I believe Mother Nature has a way of showing us WHO we are and WHY we exist. She is smart. She is powerful. Don't piss her off.
Finish that course: Extra time at home means you can finally finish that course you bought but never started.
Clean your space: Purging feels good, and it helps tame the overwhelm. Create a cozy home office and let it inspire you.
Set boundaries: If managing a new-to-remote team, create the framework in which they should operate. At home with kids, set timelines and expectations in how you're going to work.
Experiment with new ideas: Be quick to act. In your messaging, tell your customers what you’re going to do for them. Remember, it’s not about you.
Have fun. It's tough. I know we've all craved "more time with our family." We needed this for so long, and our wish has been granted, albeit under some regrettable circumstances. But here we are.

These crucial next few weeks for you and your business are about self-preservation without greed and preparedness without fear.

Take care of your family and your team/employees. If you are forced to work from home with your kids, create a schedule and stick to it (Here is our homeschooling calendar.) Lean on your partner for help, your neighbors for support and your extended community for encouragement. We are ALL in this together.