The question of whether there is a recession coming in 2023 seems to have a clear answer today. It is no surprise to the business community that a severe recessionary spell is just over the horizon as we enter 2023. According to Bloomberg, economists at Barclays Capital Inc. forecast 2023 to be one of the global economy‘s worst years in the past four decades. With this sword of Damocles hanging over the global economy, entrepreneurs must begin preparing immediately for the inevitable or risk severe negative consequences as the recession sweeps across the globe.
Luckily, the world has learned a great deal from the Covid-19 pandemic, with most businesses left standing in the aftermath of such a global catastrophe now knowledgeable in combating recessionary pressure. However, one can never be too safe, and entrepreneurs must use the time they have in the first quarter of 2023 to erect a wall between their businesses and the negative impact of the coming recession. To that end, this article lists some effective measures entrepreneurs can take to shield their business from economic hardship and make it out safe and sound on the other side of the storm.
8 Effective Tips to Prepare for Recession
Internally Audit the Business
Instead of being caught questioning whether there is a recession coming in 2023, entrepreneurs must start preparing for the worst. The first and most vital step when preparing for a recession is to take stock of your surroundings and situation. Next, entrepreneurs must have a firm finger on the pulse of the business’s finances, and audit all of their financial information and processes to ensure that there are no vulnerabilities and inefficiencies.
Often, the little inefficiencies pile up when ignored and ultimately negatively impact the business, so one can never be too careful and secure in their methods. There is always room for improvement and optimization. The best way to get the job done is by hiring business analysts and financial professionals to audit the business and map out the business’s financial situation for future decision-making.
Build Up a Cash Reserve
After auditing the business, it comes time to act. The first order of business is to cut down on extra costs, redirecting the saved cash into a reserve for rainy days. Having liquidity is immensely useful in recessionary times and can bail the business out of a sticky situation. Diverting all the excess revenue to a cash reserve is a good practice for a business, but exceedingly so when preparing for an economically strenuous future.
Don’t Put All Your Eggs in One Basket
One of the biggest mistakes an entrepreneur can make is leaving the business vulnerable to a single point of failure. Instead, entrepreneurs must diversify their options, whether it be through new product or service launches, or broadened market appeal. Whatever the method, the business must have options to fall back on, should any trouble arise. If the decrease in consumer purchase power amid the pandemic taught us anything, it is that a business must have a broad market and consumer base and a variety of products to sell.
Customer Retention is Key
Trying to capture new customers is not the wisest move amid a recession. Instead, entrepreneurs should focus more on retaining their existing customer base. The key to good customer retention lies in being caring. In today’s hustle and bustle, more and more customers have cited poor customer service behavior and incompetence as major reasons for abandoning a brand. Therefore, entrepreneurs would do well to invest in developing a strong customer service function in the business, and ensure that the customers are cared for with respect and dignity.
It is as simple as that. there is no need for extravagant gestures such as coupons, presents, and the like, good customer service comes from good communication and relationship building between the business and the customer base. Expertise Accelerated publication titled “ How to Wow Your Customers Every Day in 2022” highlights the importance of good customer service, and paints a clear picture of what entrepreneurs should strive for when developing their customer retention strategy.
A recessionary spell is full of unpredictable developments. Things change daily, and entrepreneurs must stay vigilant and keep a strict eye on the economy and business landscape. It is very easy to get tunnel-visioned during a recession and miss some important development that changes everything. For example, the government may provide businesses with economic aid to weather the difficult times, which can be a major missed factor when developing business strategy and forecasting finances. Staying on top of the news and frequently checking reputable economic forums can save the business a lot of trouble.
Entrepreneurs must prepare for things to not go their way, and being flexible enough to pivot into a different strategy is paramount regarding entrepreneurial responsibility. Things can change at a moment’s notice, and the business must be in gear to adapt as required.
Keep the Morale Up
Keeping a business going amid a recession can be immensely stressful and draining for entrepreneurs and the team. It is important to not let company morale fall, and having a positive attitude and considerate mindset can go a long way. Remember, it is not just the business that is enduring the recession. It is also the people working. Staying in touch with the team’s needs and ensuring staff satisfaction is also a major responsibility of an entrepreneur, and one must be mentally prepared for hard times.
Hire a Business Analyst
Plans rarely go as expected, and one must be prepared for things to go awry. Hiring a business analyst can be very helpful during recessionary times. They can project possible worst-case scenarios for the business and help prepare contingencies if the business’ current strategy proves insufficient. Therefore, it is of the utmost importance that entrepreneurs look into hiring a business analyst as soon as possible and begin working on future strategies. It is important to mention here that, while business analysts are an invaluable resource for businesses, the harsh reality is that most companies amid a recession simply cannot bear the cost of one. There are alternatives available, however, and entrepreneurs should look into the prospect of hiring a business analyst through specialized firms such as Expertise Accelerated.
Expertise Accelerated as Your Strategic Partner During Recession
Expertise Accelerated is a Connecticut-based staff augmentation specialist of accounting & finance and supply chain management. EA empathizes with US businesses’ plight regarding hiring costs, introducing a cost-effective alternative. By leveraging EA’s handpicked offshore business analysis consultants, entrepreneurs can onboard highly qualified professional business and finance analysts at a fraction of the in-house cost.
EA CEO Mr. Haroon Jafree (CPA) is a veteran of the US business landscape, having served as CFO for notable brands such as Sabra Hummus and Saffron Road. Mr. Haroon specializes in business process optimization and has proven experience in completely reinventing business processes to achieve significant cost savings. Under the leadership of Mr. Haroon, EA, and its remote professionals bring US businesses the rare opportunity to compete on a level playing field with established corporations and safely endure the incoming recession.