Recession Watch: You've just started a new business.. Now what?
Plan for tough times. Examine your company's budget and do some contingency planning. Newer businesses often have lofty goals laid out in their financial projections. Come to terms with the fact that you're probably not going to hit those targets, and could fall well short.
Take advantage of low interest rates. Along with a recession comes low interest rates, making it an ideal time to borrow money. If your business is strong enough, it might be a good time to look for financing. It's especially attractive if you're able to lock in a low rate on a loan for five or ten years.
Try to diversify. Even companies that have a narrow product or service focus can find ways to diversify what they're offering and who they're offering it to. Look for new types of customers or a new way to market your offerings. By broadening your horizons while still staying in your "sweet spot," a recession can be less painful.
Continue to market yourself.It's tempting to cut back on advertising and marketing while money is tight. That's not necessarily the answer. In fact, an economic downturn may actually require more marketing efforts for a company to remain in the game. Consider being more strategic about your marketing efforts, rather than cutting advertising dollars all together. Go with the events and opportunities that will bring you the biggest bang for your buck.
Be willing to do just about anything. When times are tough, you may have to consider taking on projects or clients that you might not normally consider. Don't go outside the range of what you're qualified to do, but consider accepting less-than-ideal projects to help create a little additional cash flow.
Have a contingency plan. What will you do if things get really bad? Will you have to shut your doors? Or do you have a plan to keep the business open but earn some money from freelancing until the economy recovers? When I first started my business, I worked with a temporary agency to bring in additional cash. This worked out wonderfully because I still had the flexibility to run my business and be available at critical times, but I was able to still put food on the table.
Some industries do better during recession. If you're in a line of business that actually does well during difficult economic times, create a plan to capitalize on this. Make the most of any selling opportunity for as long as you can, but realize that when the economy rebounds, you may have to come up with a different strategy.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud. This post is part of a series offering consumers advice on what to do during a recession.