Avoiding Debt During a Recession as a Small Business Owner

Avoiding Debt During a Recession as a Small Business Owner

Running a small business during a recession is a tall order. Over the course of the pandemic, many business owners have had to close their doors for good. Now that we’re nearing recession territory across the globe, what are the odds your small business will fall into this debt trap? We’re here to help you with strategies to keep your revenue flowing–recession or not.

Plan, Plan, Plan

Just as in your personal life, planning ahead can make things a whole lot easier. In fact, when the pandemic hit, it was the small businesses with solid contingency plans in place that were the least impacted by economic swings. It’s generally a good idea to plan for the worst-case scenario, too. Now that inflation is taking a toll on consumers’ wallets, it’s more critical than ever for businesses to consider how this will affect their bottom lines. Take a good look at your books: what are your customers most interested in? What are their frequent purchases? What do they search for on your website? How often are they visiting your storefront or website? Using all the customer data you have available, create a new plan for how you can keep them most engaged.

Cut Costs

Something else to have a close watch on are costs. For example, some items you regularly purchase to keep your business running may be more expensive as a result of supply chain disruptions. It’s important that business owners try to keep their business and personal finances separate–otherwise you could end up in financial distress in all aspects of your life. Any successful business needs to be able to stand on its own two feet, without relying on the owner’s personal finances to keep it afloat. Take a look at what things are costing now and consider adjusting your pricing models as needed. Not sure where you’re spending money? Analyze your last three bank and credit card statements to see where you can trim excess expenses.

Make Smaller, More Frequent Changes 

You can’t be revamping your business every 5 minutes just because you learned something new about customer behavior–that can send customers into panic mode.. Instead, consider making changes in small increments–monthly or quarterly, rather than focusing on the long-term. What does your business need in the near-term? What will it need next month, or next quarter? When in a recession, the markets are notoriously unstable and consumers are more conservative with their spending. There’s also no real way to know when a recession will end. It’s almost a fruitless effort to put too much energy into long-term growth for your business when so much is uncertain. Take baby steps and proceed with caution.

Small business debt is a scary thing to consider. Luckily, our experts at ARF Financial are here to help you weather the storm of recession. With a little assistance from a small business line of credit, you’ll be positioned to tackle unforeseen costs during this time of uncertainty. Once approved, you’ll be able to pull funds from your line of credit whenever you need, only paying interest on the money you take out. You’ll also get 24-hour access to 5 separate loan drafts over a 6-month period. Need to request funds online? No problem! With convenience like this, it’s no wonder thousands of small business owners nationwide have turned to ARF Financial for their business financing needs. 

 


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