Can Your Business Survive a Recession?
Who can forget the 2008 recession where thousands of businesses had to close their doors? At the time a crisis in the subprime mortgage market in the United States turned into an international banking crisis with the collapse of the investment bank Lehman Brothers, followed by a global economic downturn.
Many economists predict that another recession is on the way and sooner than you may think. What are these predictions based on? Economics is a complicated subject with many factors like interest rates set by the Fed that affects the economy.
However, there is one thing that historically and consistently has shown a recession is on its way, and that is an “inverted yield curve.” An inverted yield curve is when short-term interest rates of fixed-income securities issued by the U.S. Treasury become higher than long-term interest rates.
Higher interest rates on short-term borrowing mean it is harder to borrow money. Then things like business capital spending, residential development, and spending on consumer products such as automobiles decline.
History shows us recessions often follow an inverted yield curve by a delay of about 14 months to 27 months. The last inverted yield curve was 14 months before the 2008 recession began. The yield curve predicted the last 7 recessions.
It’s Inverted – Be Prepared!
The U.S. Treasury yield curve inverted officially March 22, 2019, when the yield of a 10-year note dropped below the yield of the 3-month bill. So, there is a high likelihood of a recession in the next year or two based on historical trends.
However, there are many things going on nationally and globally that could speed up the timeline. Whenever it happens, as a business owner, make sure that you are prepared to weather the storm. Know your risk tolerance, think about what you will do if the market drops by 10, 20 or possibly 50 percent.
Keep growing your business
Recession or not you need to run your business expertly. But here are some things to do to stay afloat and hopefully keep growing your business.
- Secure capital even if you don’t currently need it. Don’t wait until the recession to get the money you may need if your cash flow decreases.
- Pay off personal and business debts. Businesses with less debt in a recession or at any time are more likely to thrive and survive than those with a debt burden.
- Make the most of your current customers. Continue to grow your customer base, but increase the value of existing customers. For example, PrimeView offers services like social media marketing to Arizona clients who before were only using our web design services.
- Start collections at 30 days past due. With money being tighter, waiting 45-90 days for payments is not acceptable. If the client is 30 days past due, track down the accounts-payable manager.
- Lower spending where possible. Don’t make big investments in things you don’t really need like fancy equipment or software. Do your research and invest wisely.
Don’t cut back on Digital Marketing!
Whatever you do, don’t eliminate or cut back on digital marketing activities. Times where the economy is slowing are exactly the times your business needs marketing the most. If you can’t afford a big marketing campaign use lower-cost methods such as social media marketing.
If you have the budget growing your business with AdWords is a tried-and-true method. You can also, and actually should all the time, use email marketing and blogging, which are inexpensive ways to get your message out.
You need to help consumers find your products and services and choose you rather than your competitors by getting your name out there. So, don’t give up on your marketing efforts, if possible, increase them.
No matter the size of your business you need to spend on digital marketing. Take measures to recession-proof your business and you will stay in business and even be more successful.
Get Inspired to Work Harder
Your company can actually grow stronger during a recession. In a strong economy, businesses can get complacent and lose some of their competitive edge. A tough economy can make you work harder, be more innovative, and do things differently that improve your business.
PrimeView has been in business for 23 years now and has gone through several recessions, including the 2008 crisis. We are an Arizona web design and SEO company that knows how to leverage digital marketing and hard times to stay on top of the game.
Why not contact us and get started with services that can position your business to survive and thrive during an economic downturn or crisis?