10 ways to get prepared for recession
A recession is generally defined as occurring when an economy experiences negative growth for two successive quarters. Clearly many factors can create this situation; some sectors may actually do better in a recession!
Here are ten ways to make sure that you’re ready for a recession if one comes along:
- Reduce your risk – people become more cautious and new projects get shelved during times of recession. Reduce your risk and don’t invest ahead of customer commitment.
- Watch your costs – Now might not be the time to buy new premises or increase your debt. On the other hand, if you’re confident, it can be a brilliant time to invest as prices may be lower!
- Collect your debts – Bad debts are an inevitable effect of recession. Your debtors might be safe as houses, but if they gat caught by a massive bad debt, you might suffer as a consequence. Be merciless when it comes to collecting what you are owed.
- Challenge gift-horses – Firms under pressure often seek out new suppliers as they reach their credit limit with their regulars. Be wary of the ‘too good to be true’ big order. It might be just that!
- Don’t panic – Slowdown does not mean stop. People still need to eat and the world will not end. Providing you can weather a storm you’ll be fine. Don’t talk recession up; it might never happen.
- Look out for opportunities – There is always an upside and huge swathes of the population are not touched by tough times. Older people for example may spend more if they think prices are suppressed.
- Share intelligence – Whilst you should never spread rumours, there are times when a quiet word with others about your experiences with a customer or supplier can help them. Help others and they’ll help you.
- Live life to the full – You should always live every day as if it was your last. However bad things might get, today is probably not so terrible. Be positive and enjoy today. Don’t fret about things you can’t change.
- Avoid regrets – If it does get tough for you, don’t beat yourself up about decisions that with hindsight you would not have made. Few of us have a fully functioning crystal ball. Look forward not back.
- Be tolerant – Whilst you need to manage your exposure to risk, if you’re in a strong position and others are not, you might benefit from giving them some practical help. This applies particularly to any suppliers you have that might be vulnerable.