But the steps mentioned are great advice for preparing for the recession and for future growth. The rates of some of the companies mentioned are high, you may be able to get a better deal at your local bank. I worked in banking for over 25 years and these 5 tips plus 1 are very good advice. Others may qualify for short-term financing options including business cash advances. Now may be the right time to leverage financing to invest in inventory, equipment or even real estate to help your business serve more customers, even in tough times.įor larger projects, a term loan that can be repaid over several months or years may be the best choice. “These companies reduce costs selectively by focusing more on operational efficiency than their rivals do, even as they invest relatively comprehensively in the future by spending on marketing, R&D, and new assets.” Dubbed “progressive companies,” by the authors, they “deploy the optimal combination of defense and offense.” A Harvard Review Business Review research project, Roaring Out of Recession, found that companies that best survived recent recessions strike the right balance between cost cutting while continuing to invest in growth. While you may be tempted to slash costs, don’t ignore opportunities to grow your business. If you do nothing else, make sure your business has access to a line of credit. Banks have the strictest standards for lines of credit, but offer the lowest interest rates, while online lenders are often more flexible on qualification requirements and can make credit decisions very quickly. If your business faces a cash crunch, it may be harder to qualify. The ideal time to get a line of credit is before you need it. Once you secure a line of credit, you don’t need to fill out an application every time you need to borrow more money. You borrow as much as you need (up to your credit limit) and only pay interest on the outstanding balance. Line Up a Line of CreditĪ line of credit is one of the most popular forms of financing used by small businesses, according to the Federal Reserve’s Small Business Credit Survey. Here, we’ll focus on why and how to leverage financing opportunities to help your business navigate the coming year. Having access to financing may help small businesses when cash flow is uncertain, and can provide funding needed if the business needs to pivot to provide the products or services that are in demand. There are numerous ways entrepreneurs can try to prepare for weathering the next recession, from cutting costs to diversifying product lines. It’s impossible to predict when a downturn will occur or how long it will last, but one thing is for sure: small business owners should take steps now to prepare for potentially rocky economic times ahead. will have a very short, mild economic recession, while 11% foresee a challenging recession. Eight in ten small business owners believe the economy will enter into a recession this year, according to The CNBC|SurveyMonkey Small Business Index Q2 2022 survey.ĬEOs of larger businesses surveyed by The Conference Board were slightly less pessimistic. Business owners are bracing for an economic downturn, with no idea when that may happen or how bad it may be. If you’re worried about the potential impact of a recession on your small business, you’re not alone.
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