Traits of Recession-Proof Businesses
Economic uncertainty is undoubtedly a topic of concern for many consumers and a stress factor for many businesses. Like many things, education is vital to breaking through fear and anxiety. Learning what makes a company resilient during economic volatility helps owners prepare for the lean times and come out stronger on the other side. This blog will shed some light on common traits shared by strong, long-lasting businesses that have weathered many economic seasons and provide tips on how you can become one of them.
Signs a Business is Resilient to Recessions
How do you spot recession-resilient companies? There are several indicators:
• Some are the publicly traded companies referred to in financial circles as blue chip stocks. These companies are known for quality products, have withstood the test of time, and stay profitable during even stagnant economic times. Examples of blue chip companies are Nike, Proctor & Gamble, and Coca-Cola.
• Others are critical industries that are in demand no matter which cycle the economy is experiencing. The medical industry, service companies, childcare, and repair shops are a few examples.
• Businesses that provide essential items are also recession-proof. Those may include diapers, groceries, and auto parts.
• Approximately 1% of the country is virtually impervious to the effects of a recession. The ultra-wealthy keep financial advisors, cleaning businesses, plastic surgeons, caterers, decorators, and providers of luxury goods and exotic automobiles to help maintain their lifestyles.
Traits of Recession-Proof Businesses
While you can anticipate which businesses are recession-proof by their sector, it doesn’t guarantee that they will succeed. A company that is prepared to withstand market volatility has several shared qualities. Compare the following traits to your business to see how prepared you are for a potential recession.
Your Services are Unique or Essential
Does your business provide a product or service without which the public cannot easily live, such as feminine products, disposable diapers, baby formula, uniforms, or shoes? Hospitals, doctor’s offices, emergency services, and pharmacies are other essential businesses that must be available no matter what else is happening, as evidenced by the pandemic. While there are several examples of unique and essential services, not every company can claim that title.
You Can Capably Adapt to Changing Circumstances
The most recent and impactful illustration of changing circumstances was the pandemic. Businesses that depended on foot traffic to their storefronts had to find a way to survive during enforced restrictions and quarantines. Some restaurants created outdoor markets for nearby residents. Meanwhile other enterprises that would otherwise be at a standstill started making masks or PPE (personal protective equipment) when there were critical shortages. Do you have a business continuity plan that includes events like natural disasters or another pandemic?
You Manage Your Cash Flow Effectively
Being a business owner entails providing quality products and customer service and managing your cash flow effectively. While you must allocate some funds to operating costs and reinvesting in your enterprise, you must also plan for the potential ‘rainy day.’ Assuming your expenses will remain constant or even increase with inflation or sudden price surges, do you have enough liquid funds set aside to maintain your operations? Do you have a plan for reducing expenses to maintain your revenue?
You Follow Long-Term Plans to Protect Your Business
It is one thing to plan for a recession but do you have long-term plans for an ongoing concern? When implementing your crisis strategy, you must keep your goals in mind. You can continue to align your decisions to your purpose when you map out your objectives and the steps necessary to achieve them.
Tips to Protect Your Business
Maintaining a connection with your core customers is a crucial step in protecting your business during tough times. Audio and digital promotions are vital in letting them know you are here to help. Your messages can be crucial in uncertain times, reminding them they are not alone and that resources are available.
Another tip is protecting your cash flow. Acquiring advance financing or simplifying your business processes to be more efficient and save costs is insurance against economic uncertainty. It also helps to create a leaner, more agile operation moving forward.
Is Your Business Recession-Proof?
Surviving economic downturns involves planning for the worst and keeping a positive attitude. There will be times of economic prosperity and times of recession. Your plans for the future should include bolstering your business for success in the long term despite occasional volatility.
Remember that marketing is equally as critical during a crisis to keep your customers informed, if not more so. Audio promotions are a cost-effective way to promote and maintain engagement. You will show your core customer base that you are here to help them weather the storm while keeping your brand top of mind.
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