Those $1,200 stimulus checks from the federal government are long gone.
Businesses that were fortunate enough to receive the PPP loans have mostly spent through those nest eggs.
Anyone that has been keeping up with their bills because of the extra $600 per week the government is playing for unemployment is about to lose those benefits.
And there is still no end in sight for the Covid-19 pandemic. In fact, the situation is actually worse than ever in many cities around the country.
As business owners around the country are finally starting to realize that things aren’t going to go back to “normal” anytime soon, they are struggling to comprehend how to survive this “new normal.”
No matter what type of business we are talking about, guarding against the coming recession should be on the mind of every business owner across the country. And while that doesn’t make for fun conversations, it could mean the difference between surviving the next couple of years and the alternative.
Watch Prime Costs Like a Hawk
The primary area of focus for every business owner during prosperous times should always be their prime costs…and this is doubly important during difficult stretches.
Every profitable business model relies on hitting certain targets for cost of goods and labor percentages, and any dip in revenue could cause these two key numbers to spike to the point where the entire business becomes unprofitable.
Closely monitoring your labor and raw material costs is the fastest way to make sure that you catch any changes that could have a life-threatening impact on your business.
Cut Additional Expenses Ruthlessly
In good times, a business that manages its prime costs appropriately can likely afford some unnecessary expenses like cable television, company vehicles, and expense accounts. But those expenses must stop when the going gets tough.
That’s why the second step in protecting your business from the coming recession is to go through your additional expenses with a fine-tooth comb looking for anything that you might be able to cut in order to make your operation lighter.
Save the Money You Save
Every dollar that you save now can be put towards more critical expenses down the road, so do not hesitate to cut ruthlessly from just about every aspect of your budget.
Of course, you have to actually save the money for that to happen. If you save a few bucks by getting rid of Satellite Radio only to blow that money because you don’t want to cut your labor hours, you aren’t really saving anything at all.
Look for New Revenue Opportunities
While most of the headlines are doom and gloom right now, the pandemic is forcing businesses all over the country to double down on their strengths and find new revenue opportunities. Don’t make the mistake of assuming that you can’t do the exact same thing in your industry.
Test out as many different ways to reach your current customers, as well as new ones, as you possibly can right now. Just remember to do so with a focus on staying lean and keeping the budget for new ideas close to zero.
Unfortunately, it doesn’t look like we are going to see the other side of this Covid-19 pandemic anytime soon, and even when we do it is likely that we are still going to be struggling through a massive recession.
The best way to protect your business from both is to do what you’ve always done even better than you’ve always done it. It is possible. And you can do it.