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8 Tips for Building a Recession-Proof Business

A businessman giving a presentation to a group of people.

​The Great Recession of 2008 was one that left many business owners in the United States feeling defeated, angry, and overwhelmed. Now, with the economy showing signs of yet another downturn, it's time for business owners to take a step back, reassess their activities, and think about ways to become recession-proof. Few companies out there are immune to a cooling of the economy. Giants like Google are affected by ad spending dropping all the way down to small businesses, where small business marketing might be less effective as consumers look to spend less.  

The Federal Reserve is gradually increasing interest rates to fight back against rising inflation. For business owners, that means it will be harder to get loans and financing if they need it. It's also going to make it more expensive for ordinary people to buy consumer staples like food and gasoline. 

There are many ways that business owners can become recession-proof and stay profitable and even grow during hard times. It's not time to panic, but it is time to make some changes in your business so you can weather the storm. Here are eight places to start. 

1. Start Preparing Early for an Economic Recession 
You already know the economy moves in waves. The question is: What can you do about it? The first thing to do is prepare for a recession, which means spending less and saving more. You want to build up your cash reserves — especially your emergency savings — and get rid of debt. 

You can do economic research to determine the best time to buy inventory and when to make strategic moves that will help your business. This can help you stay ahead of the curve and position your business for growth. Discount retailers like Walmart tend to do well during a recession because they offer products at lower prices. You can employ a similar strategy, as long as it aligns with your overall goals. 

Make sure you have enough insurance coverage and a backup plan in case you need to cut back on expenses. As a small business owner, you have more options than most people to prepare for an economic downturn. For example, you can change your business model or increase your prices. 

Even traditionally recession-proof industries, like the construction industry or advertising, may not be immune from the effects of a recession. Their clients may not be able to afford their services during such an unstable time period, or they could decide to cut back on spending. 

When times are good, prepare for tough times. That's how you maintain financial stability when they inevitably arrive. 

2. Be Forward Thinking 
In the current state of economic activity, it's important to think long term and make smart decisions. It's easy to get caught up in the present moment and make decisions you might regret later. When you're making business decisions, keep an eye on the future. You may have to change course on the fly and think quickly. 

This is the time to do competitor analysis. The competition is fierce during a recession because everyone wants their share of shrinking consumer spending. But just because someone else is doing something doesn't mean it's right for you; do your research before jumping into any new marketing strategies or partnerships with other companies 

Don't overspend just because the stock market is booming. The next economic cycle is always just around the corner, so it's important to save as much money as possible during good times. You never know when you'll need it. 

Find out what your customers want and need from you during a recession. The best way to do this is by asking them. It may surprise you how much your customers will pay for a product or service that can help them survive during a severe economic slowdown. 

3. Diversify: Keep Cash Flowing 
Cash flow during a looming recession is likely to be an issue for many small businesses. As the economy slows, companies will need to conserve cash for survival. One of the smartest ways to do this is to diversify your income streams. 

You can do this by offering new services or products that aren't directly related to your business. For example, if you own a retail store, consider adding an online shopping section to your website and selling items via the internet. If you have a service-based business, such as accounting or law, consider adding another service that applies to what you're already doing. 

Investing in a commercial real estate portfolio during a recession can be a smart move. As long as the market remains steady or grows again, real estate will continue to hold its value and potentially increase in value. Becoming a real estate investor ahead of a recession can give you a good opportunity for revenue growth. 

Look to Your Employees 
There are few recession-proof jobs going around, which means employment is another area that businesses can diversify in the early stages of a recession. If you're a business that relies heavily on the number of employees, consider hiring part-time staff or freelancers to take some of the workload off your shoulders. This will help free up resources while giving you more time to focus on other areas of your business. 

Labor statistics collected by the National Bureau of Economic Research show that over 30 million workers lost their jobs during the previous recession in 2008. Job loss is a major fear for employees during a recession, so your workers will be eager for opportunities to take on new projects and responsibilities in exchange for secure wages.  

Consider offering incentives such as flexible hours or bonuses for completing certain tasks. This will help keep morale high while allowing you to get more done with the same amount of resources. 

4. Protect Your Existing Customer Base 
In a recession, it's tempting to try to grow your customer base by offering discounts and special offers to new customers. However, this is often not the best strategy to use during a downturn. 

Instead, focus on your existing customer base and make sure they are happy with the products or services you provide them. This will help ensure that they continue using your business and recommend you to their friends and family members. 

Some ways you can do this include:  

  • Offering discounts to existing customers 
  • Organizing events and promotions for your current customers (e.g., birthday parties) 
  • Offering loyalty programs that reward repeat business  

Remember that your existing customers are the most important part of your business and that they should always be at the forefront of your mind. 

5. Quality Over Quantity 
It's easy during periods of economic uncertainty to prioritize sheer productivity. But when productivity comes at the expense of quality, the results can be disastrous. For example, if you're operating on a tight budget and you can only afford to hire one worker, you should hire someone who will provide the best possible service. Hiring a less experienced employee who will need training could end up costing more than hiring an experienced professional who can hit the ground running. 

In the same vein, don't cut corners when it comes to quality control. This is the time to focus on your reputation as a company and make sure that your product is the best it can be. You may have to spend more money on quality control than you would have with a cheaper workforce, but in the long run it can save money and increase demand by preventing costly mistakes and product recalls. 

6. Innovate and Adapt 
Innovating is a great way to stay relevant in the face of an economic crisis. It also helps you avoid the rapid decline that can happen when people lose faith in your company, or when your competitors offer better products and services at lower prices. 

The unemployment rate tends to increase during a recession. Instead of cutting corners with your employees, you can use a recession as a chance to find new talent and create a more productive workforce. This is truly forward thinking, in the sense that you're already positioning yourself for the end of the recession, even if you're not quite sure when that might be. 

Try creating new products, services, or ways of doing business that will make your business stand out from the pack. If you've been thinking about expanding into a new market or launching a new product line, now might be the right time to do it. 

Flexibility is important at this stage. Don't miss opportunities for growth because you're too concerned about day-to-day survival. 

7. Focus on Company Culture 
While it's tempting to focus on the bottom line and keep costs down, remember that your employees are your most valuable asset. If they're not happy, they won't do the best job for you — and if they don't do their best, you won't succeed either. 

"The Occupational Outlook Handbook" is a great source of information about what kind of skills and qualities employers are looking for in employees. You can use this information to help you decide which skills your company should emphasize and which ones it can afford to ignore. 

So instead of cutting corners at every opportunity, focus on keeping your team happy and engaged. It's more expensive in the short term but will pay off in the long run when you have a loyal workforce who will stick with you through thick and thin — including during an economic crash. 

Many job seekers are attracted to companies that have good benefits and a strong reputation. If you can offer them those, you'll be able to attract better candidates and keep your employees happy. That will help you avoid turnover costs altogether — and it will also help if the economy tanks because they'll stay with you longer and help guide new employees through their first few months on the job. 

8. Find Partners 
During harder times and good times, many small businesses will look to add partners to help grow their business.  It can be hard to make these investments in the future as a business looks to lower its customer acquisition cost, but many times bringing on an expert to help with marketing or operating the business will end up saving them time and money. Here are a few ways partners can help you. 

Marketing services – having an external company run your marketing can improve lead flow and reduce costs by wasting money on marketing that may not get the attention it needs if you run it in-house. There are plenty of options out there to check out that can help with SEO, website management, social media, brand building, and other services. 

Business management – some owners hate running the day-to-day payroll, scheduling, and other operations. Bringing on staff or a partner to help with these can increase efficiency and help speed up business for more appointments and faster lead follow-up. 

Technology – there are many technologies out there that were once only available to large corporations. They can help further automate your business and free up time for more appointments, and faster lead follow-up. There are a lot of great companies out there like Scorpion, Hubspot, Salesforce, and many others who have developed technologies just for a small business. Many times a partner or services company will provide access to these great technologies as a part of the service you pay for. When you are considering a services partner to connect with, make sure they are offering the best technologies to help your SEO, scheduling, billing, and other operations improve. 

Thriving During a Recession 
An old proverb in business says you should avoid doing what everyone else is doing. While everyone else is concerned about a recession, you can get ahead and look for new opportunities. 

Creating a recession-proof business is about careful preparation and finding ways to outperform your competitors during challenging times. The positioning you achieve during a strong economy will determine your position during economic uncertainty. 


This article was written by Joe Martin from ReadWrite and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to


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