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Mark Wardell's 10 Tips for Recession-Proofing Your Business


 

 

1. Focus on efficiencies

When times get tough, most people think about cutting back on their expenses, which is excellent advice if they have internal waste. But watch out for the trap of decreasing your margins. You can only cut costs so much. Eventually you also need to focus on the efficiencies of systems employed to operate your business. For example, almost every business could improve its production process by revamping employee job descriptions and workflow.

2. Embrace automation

While automating your production processes may absorb some cash up front, if you can afford it, it’s almost always worth the investment in the long run. The timing is usually right, because the cost of buying equipment typically comes down in a sliding economy.

3. Train, train, and train some more

Most business owners hire employees, and expect them to fit right in and do a great job. Then they get frustrated when things don’t instantly work out the way they planned. Instead, start every new hire with a comprehensive training program and establish a regular training schedule going forward. Depending on the job, this can often be accomplished in as little as 10 min per week.

4. Develop a Culture of Excellence

This is achieved when everyone in the organization plays an active role in bettering the company. Most people go to work to do a job. But in a recession-proof company, everyone understands the bigger picture and their connection to it.

5. Develop Leadership

No company can grow its value significantly without leaders. These are the people who are willing to take a good idea, and run with it all the way to the finish line. Unfortunately, this is often the exclusive domain of one or two people at the top of an organizational chart, severely limiting the potential of the company in question. The solution is to give your people as much responsibility as they can handle, pushing them to sharpen their leadership skills on a daily basis. You may be surprised at how well they perform, given half a chance.

6. Re-negotiate your contracts

Now is a great time to re-negotiate with manufacturers who have seen a reduction in their sales volumes but- in an effort to maintain economies of scale- haven’t yet reduced their production volumes.

7. Consider ways to outsource manufacturing

Outsourcing isn’t the exclusive domain of the “big guys” any more. It is now possible for businesses of all sizes to outsource some or all of their manufacturing to other parts of the world, such as China, India or Mexico. **However, if sustainable business practices are important to you, make sure you do thorough checks on the manufacturing processes used by your outsourced suppliers, whoever they are.

8. Consider buying struggling competitors as a recession-proofing strategy

Though not the simplest strategy, this can be a relatively quick way to increase market share, reduce proportional overhead and improve economies of scale. Taking over an existing company has its own particular set of challenges of course, but when it works, it can be highly effective.

9. Change up your market offering

Look at ways that either expanding or decreasing your product offering will help leverage the shifting economic climate.

10. Secure your intellectual property

Every business is started and built on the ideas of its founder. And as it grows, these ideas can evolve into a wide variety of proprietary items, providing various levels of value to the business. These could include things like, proprietary formulas, manufacturing techniques, company logos, marketing tag lines, and so on. While many of these items may be associated with the business from a customer’s perspective, some may still be legally associated with the owner, reducing the company's value when it's time to sell. For example, a software designer who began a company as a sole proprietor may continue to own the copyright on the software personally after incorporating, if steps have not been taken to properly transfer these rights to the new corporation. The good news is these types of issues can typically be resolved fairly easily with a visit to an intellectual property rights lawyer.

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