Is Your Business Ready for a Recession?

We are not in the business of predicting a recession, to be sure. But it’s a very real possibility — with inflation is at its highest rate in 40 years and interest rates rising steadily. The National Bureau of Economic Research defines a recession as a “significant decline in economic activity that is spread across the economy and lasts more than a few months.” Jerome Powell, the Federal Reserve Chair, noted recently that while a recession is possible, it’s not inevitable. In the event we are headed into a recession, however, we’ve outlined a few ways to help protect your business from bearing the brunt of it.

Be Mindful of Your Cash Flow

During recessions, cash is king. That’s why it’s incredibly important that you maintain cash flow in your business. Check on your monthly cash flow and determine which invoices you may have that are overdue. If someone owes you money, it’s best to collect it now rather than wait until we’re in a full-blown recession.

Just like consumers, business owners are being forced to spend more than usual. This is due to a mix of factors including inflation, supply chain and labor shortages, residual impacts of the pandemic, and a host of other things. Take a close look at what you’re actually spending money on and do an audit to decide whether it’s truly necessary right now. Do you really need that monthly subscription to an industry newsletter? Is there dues-based organization you’re a part of that you rarely engage with? Cut the cord on miscellaneous items that aren’t benefitting your business but are adding up.

Adopt Different Ways to Sell

More and more businesses are turning to digital when it comes to sales—and that’s because it’s a wildly popular method of shopping for today’s consumers. “Ecommerce sales totaled $871 billion in 2021 and have been growing at an average of 16% annually since 2011,” according to a report from CBRE. If you’re only relying on your brick-and-mortar store to sell your products or entice new customers, think about branching out into new avenues. It’s also worth remembering that gas prices are skyrocketing too, so less people are inclined to visit an actual store when they can opt to purchase things on the web. Opening your business strategy to previously unexplored sales channels will allow you to significantly expand your customer outreach.

Borrow Before You Need It

We are always talking about the need for cash-on-hand. Small business owners often need extra, easily accessible money in their coffers to get by in hard times, and that can be difficult to come by if you wait too long. There is where ARF Financial comes in…

Have you heard about our incredible loan product, the Interest-Only Flex Pay Loan? This groundbreaking offering gives you quick access to loan amounts from $50,000 to $750,000 with no need for collateral, plus low, interest-only payments for up to 1 year. Our Interest-Only Flex Pay Loan also carries a Line of Credit with unlimited draws for up to a year. After the interest-only period, you have the option to pay the principal, or we’ve created the perfect safety net – a built-in rollover amortization up to 2 years. Want to learn more? Check us out today!