"I was expecting you."
Tell me, in the last 6 months, how many times have you heard the word 'recession'? Once? Twice? EVERY time you switch on the television?!
There's no getting away from it. The economy is in decline and the mini budget introduced by the government this last week, whilst attempting to provide some relief, has unfortunately plunged the pound into despair.
Yeah it's not great.
The question is: are you prepared for it?
If you said no, then sit back and read carefully. I'm coming in hot with some recession ready info & tips.
Let's start with defining what a recession actually is.
A recession is an economic decline that occurs over a period of time. In this time unemployment rises and trade and industrial activity drop off. Household income drops, spending decreases.
A recession typically refers to six or more consecutive months of economic decline. If you have heard the term GDP it stands for Gross Domestic Product and when this is in decline for two consecutive quarters it's a sign that there is slow or negative economic growth.
Whew. That's heavy.
How could a recession affect you?
Well, if people spend less because their income has gone down, then your income goes down directly impacting you.
So here are my five top tips for prepping for and handling a recession.
Reassess your monthly budget: It's time to evaluate your expenses and cut out what isn't necessary. Do a subscription audit every two months. If you haven't used it in the last month, it's time to go. This applies personally AND professionally.
Focus on getting rid of High Interest Debt: Mostly everyone has debt of some form. Including in business. Be it a business credit card, overdraft facility, payment plans for services or equipment, it's all debt. The question is apart from the money you have borrowed, how much is that debt costing you? High interest debt is a crippler long term and can cost you thousands. Get a pen and paper and write down all your debt including their interest rates. Work out exactly how much you have left to pay on each and which is costing you more by paying slower. That's the debt you want to focus on paying off first.
Increase your savings (or just start saving): Did you know that for a business, it is recommended that you have 3.5 times your monthly expenses in the bank account at any one time to be ready for any financial issue that might come your way? Well as nice as that would be, it's not always as easy as it sounds. BUT you can at least make a good start at creating a savings pot or look to increase it by a small amount every week. Use rounding features that most banks have or set up a standing order to put a set amount away every week without you thinking about it. Also look at finding the best high-interest savings account you can so that your money works for you.
Avoid making emotional money decisions: Got investments? As much as it may go against basic human nature, don't be in a rush to withdraw without consulting a financial advisor. You could miss out on massive upswings. Same goes for spending. If you're looking at making a hefty purchase, sleep on it for at least 24 hours.
Brainstorm how your business can make extra cash: In order for a business to stay constant and up to date, it needs to not get stuck in old habits. Even if those habits have been successful in the past. Look for ways you can viably expand your service offering without you plugging every last ounce of energy into it. This may mean that you need to reevaluate your own skillset and how best it can be used within your business. If you have specialist skills in one area, utilise it. Make yourself indispensable.
There you have it.
It's not everything you can do but it's a really good start. It won't be easy and will take careful planning but if you start now, when that ever looming recession comes knocking, you will be ready!
A little more than you can handle? Need some help forming a strategy? Let's talk. We can help get you recession ready.