Three Actions to Prepare for a Recession

If you’re concerned about a recession taking a big chunk out of your profit coffers, here are three things you can do now to prepare.

Monitoring Cash Flow

You’re pretty good about monitoring your cash flow, right? (If not reach out to us today!) As a recession draws near, it’s more important than ever to monitor it on a daily, weekly, monthly, quarterly, and annual basis. Use period-over-period comparisons to help you benchmark results. This will also help you to identify areas that need improvement and to make projections based on historical data. Take this time to also encourage vendors to pay on time; negotiate purchase agreement terms, contracts, leases, and loans; and keep operating expenses to a minimum.

Invest in the Business

It might seem counterintuitive, but during a recession, you might consider investing in the business and looking for opportunities to diversify and invest in new markets. Not only could you gain some tax deductions, but also being proactive might help you develop new or multiple income streams. Additionally, take time to review your project estimates and only take on new work that will make money.

Implement Profit-Creating Initiatives

When a recession looms, engage your leaders in more efficient ways to generate profits. Have an all-staff meeting and let them know about the company’s financial position, goals, and strategic direction. Ask them for insight into how you might save money, no matter how trivial it might seem.

“Remember the UPS turn-right initiative?” questioned Nick Finkenauer​, a MHCS shareholder and CPA. “Not only did the company reduce their overall emissions, but they also saved millions of gallons (and dollars) on fuel each year.”

There are additional steps you can take to prepare for a recession. Give us a call to help tailor a solution that’s right for you and your company.