In part 1 of this series, we discussed the warning signs that have experts expecting a recession by 2020. Rather than waiting until disaster strikes, it’s best to get out ahead of the oncoming downturn. Here’s how you can recession-proof your company before it’s too late.
Review Operational Practices
Get proactive about monitoring non-payroll expenditures. Digging deeper into spending policies encourages positive behavior change and allows businesses to be more diligent about operational spend.
Accurately Forecast Your Incoming and Outgoing
Take regular and honest stock of what money is anticipated to come in and what’s going out. Be sure you’re realistic about your sales forecast. Don’t adjust dates and numbers simply to make the figures look good.
Protect Your Cash Flow
Try to anticipate and address problems that will affect your cash flow. You can do this by regularly monitoring your budget, updating cash flow forecasts, and watching market conditions. Additionally, pay attention to customers and suppliers who might become hurdles to healthy cash flow. Send out invoices promptly, set clear payment terms and don’t ignore delays or irregularities.
Cut Spending Now to Build Capital Reserves
Reserve capital during the good times to ensure the future health of your business. Review invoices to identify where you can consolidate expenses, renegotiate vendor contract terms, and cut non-essential spend. Every department has some miscellaneous spend that, if reduced strategically, can lessen total expenses by 15 to 20 percent. It may take some serious manpower to comb through reports, but the boost to your margin can make all the difference during tough times.
Making sure the proper checks and balances are in place for operational spending is a good measure to follow, no matter the market conditions. Recession-proof your business through proactive and strategic cost cutting now. Curious where to start? Silverback can help. Contact us today.