Is Your Business Ready For A Recession? 10 Crucial Questions For Creative Entrepreneurs In Uncertain Times

It’s no secret that the world is in a crisis state right now. Everywhere you look, you’re hearing about the Coronavirus. The latest numbers, the dark-humored memes on Social Media, tips on how to wash your hands properly–you get the idea.

So what do I make of the situation, and what does it mean for our businesses and lives?

As a fellow citizen and human being, I’m following the recommendations to reduce the immediate health concerns. That’s a given. As a traveler, I’ve adjusted some of my upcoming plans (such as a trip to Ireland that will have to happen another time).

But what about the CFO part of my life? Looking through that lens, Isee other potential effects of this pandemic. 

Namely, I’m concerned about the impact it’ll have on the economy in the days, weeks, and months to come.

(As of this writing, the government looks to be taking steps to help. The house has passed a bill to allow for paid leave, testing, and tax credits, so that’s a start!)

Now the question remains…

What does a potential economic recession mean for us small business owners? Is it going to rebound quickly, will a recession happen at all, and what does all this mean over the long game?

I’m not saying that a recession is guaranteed (although experts have been predicting a recession for years, Coronavirus or not). But honestly, the odds are in its favor right now. n And it’s not only about our stock markets taking a hit, either. There are several other global factors as well.

So that begs the question once again–what does all this mean for entrepreneurs? Here’s my take.

Any time there is a disruption in the economy, it’s an opportunity. It’s a chance to tap into our resilience, creativity, and preparation skills. These talents are literally what makes us ENTREPRENEURS.

In other words, we expect uncertainty as a part of this entrepreneurial ride. Sure, we don’t always like it. But we get in a way that employees don’t that uncertainty is a part of life. So you could say that moments like this are when we can truly shine! 

No matter what the state of the world is, we also have our inner peace. We have calm and confidence that guides us to make the next best moves–even if that next move is stillness.

The truth is that nobody knows what is coming next, in good times or in bad. We’ll never have all the answers. We never really know the how of our dreams and desires. There is no way to know absolutely exactly where your next sale will come from. We don’t have a say in how the Market will behave, worldwide crisis or not.  

But most importantly, we prepare. And when we prepare in times of calm, we can rise in times of turmoil.

So with that said, what are some of the practical considerations that you can take for your business in light of the times?

Here are some important considerations for you as a well-prepared entrepreneur:

• How long will this last?  While nobody knows this for certain, do your best with what you know now. Keep an eye on the timeline of everything happening without letting it take over your day. This will help you determine an objective (not fear-based) short and long term plan.

• Will be you directly or indirectly affected? This, of course, is based on your industry. But consider the longer-term ramifications for your business no matter what industry.

• What risk level are your investments, and how liquid do you need them to be? This is a time to test your risk threshold. For example, leverage losses for potential high tax bills. Or look into the stock market.

• How can you protect your assets? It’s one thing to build something. It’s quite another to protect it. How protected is your business right now? Consider what you have in insurance and contracts, for starters. Even your business entity status matters here. Look into all these things and take a real assessment of where you stand.

• How far can you leverage your cash flow or cash reserves? Calculate how far your current funds can take you without any new income. Also consider how much you can put aside each month for emergencies, starting now. (Check out my post on starting an emergency fund, if you have yet to start one!)

• Can you eliminate any debts? If you have some extra cash flow beyond an emergency fund, consider reducing any debt you might have now? Focus on recurring debt first (e.g. credit card debt).

• Can you offer payment plans for new clients? Offering flexible payment options for potential new clients could help keep you afloat. It’s also a helpful option to serve clients who want to work with you but are uncertain of their own financial state. 

• Can you hire help with the potential new payroll tax cuts? In a recession, hiring usually slows down. But if the new payroll tax cut is approved, that might boost your hiring power (and help rebuild the economy too).

• Can you create new revenue streams? Revenue diversification is a great way to expand your income potential at little risk to you. What other products or services can you offer that would take little time or expense to get out there? Get creative and have a little fun with this one!

• Can you trim overhead? Know your businesses’ break-even point. This will tell you the bare-bones minimum amount of money and resources you need to stay afloat. Even if you only need to hunker down for a short time, be real about essentials and “nice to have” things. For example, review recurring subscriptions or use up excess inventory.

What comes next? Here’s a (very) short checklist:

• Schedule a call with your Financial Advisor  (don’t have one? I have a good recommendation).

• Schedule a call with your CPA (don’t have one? I have a good recommendation). 

• Schedule  a call with your Accountant/CFO (don’t have one? I am a good one 🙂

Reach out to us if we can help in any way! Drop a comment or shoot us an email at support@coachingwithkaylee.com

Hoping for the best- planning for the worst. No matter what, you’ve got this! And we at Coaching with Kaylee are here to help. 🙂

Until next time,

Love, light, and MONEY, honey…

Kaylee