Episode 40: Recession-Proof Your Business with These 5 Tips

Strengthening Your Business Practices to Weather Economic Storms

Recessions come and go, but solid business practices can help weather economic storms.

Listen in as I share five tips to help strengthen your business for whatever is on the horizon.

Thanks for tuning in to another episode of Collab with Kiva.

See you next time!

Are you ready to take massive action in your business and make data-driven decisions? Let’s chat 👇🏽

Podcast Transcript:

Kiva Slade: [00:00:01]

Hello, and welcome to Collab With Kiva. I'm your host, Kiva Slade. From the marbled halls of the US Congress to my racing-themed office chair, I've learned that there is no perfect path to the life of your dreams. My journey over the past 20 years has included being a legislative director for a member of Congress, policy director for a nonprofit, stay-at-home mom, homeschooling mom, jewelry business owner, and now the owner of a service-based business. Whether your journey has been a straight line or full of zigs and zags, join me and my guest as we share insights, hope, and lessons learned from our female entrepreneurship journeys. May the collaborative sharing of our stories be the tide that lifts your boat. Let's dive in.

[00:00:55]

Hello, and welcome to another episode of Collab With Kiva. Today we are going to talk all things recession. On the day of release of this podcast, the second quarter GDP numbers will be out. These numbers will give us a better idea if we have stopped teetering on the edge of recession and actually are heading into one. If you follow any of this, and this is really specific to the US economy, even though I understand that other economies are obviously struggling as well. But if you follow any of this, there's debate. Are we? Are we not? Is it stagflation instead of a recession? What is it? The reality is our economy is always heading into a recession. It may be two months, two years, or ten years away, but a study of history shows us that recessions are cyclical. Booms are followed by busts, which are followed by what, again? Booms. On average a recession last 10 to 14 months, and then the market and the economy bounces back. So, starting with the end in mind, let's remember that whether we are in a recession, experiencing stagflation, or some other economic downturn, we need to remember that this too shall pass. So, whether you were in business during previous recessions or not, time and technology are constantly changing, and we need to make sure that we do make ready, make preparation for what's ahead. So, let's dive in and start with some numbers because you guys know I'd love some numbers. Small businesses have always been the Thomas the Train engines of our economy. According to freshbooks.com, small businesses generate 44% of economic activity in the United States.

[00:03:05]

That also means small businesses are extremely vulnerable to economic recession and disaster. 25% don't have enough cash to make it through a two-week downturn. According to a survey conducted by JPMorgan Chase, the average small business holds 27 cash buffer days in reserve. 27. That means that an average business can continue to meet all of its cash outflows, rent, labor, utilities, etc. without earning any money for 27 days. But of course, we know about averages. There are some that can last longer than that, and there are many businesses that can last much shorter than 27 days. So, when we're thinking about preparing your business for a recession, the first step is the same exact thing you would do for your family, manage your cash reserves. If you've been willy-nilly with your budget, it's time to get serious. If you thought that your QuickBooks will reconcile itself, sorry, not sorry. Set aside time now to get it done. So, all of this comes back to a saying that I say often on this podcast, which is, know your numbers. You should always know the numbers in your business. Remember my favorite example, Toni Braxton on Oprah's couch after her bankruptcy. Oprah told her, you always sign your checks. That's code for know your numbers. Run your profit and loss statement. Search through and see what subscriptions you can do without. It's the same thing you would do with your household budget. You guys probably don't need Netflix, Disney plus, Hulu, and YouTube. Just saying.

[00:05:08]

But also, don't cut your bangs despite your face. Don't get rid of something that will add hours back to your schedule and slow you down from moving the needle and delivering outcomes. Cut the stuff you aren't using. Forget about you forgot about the trial. You likely already have a tool that does the same thing. Go through those unfinished courses, make a list of them so you don't buy that tenth $37 how to write a sales page course. No judgment. Remember that, right? Know your numbers and trim the fat so you can make it through any lean times. And honestly, the things I am going to share today are really just business practices that we should do whether there is a recession looming on the day of release of a podcast, or again, whether it's sometime in the distant future.

[00:06:06]

Knowing your numbers and trimming the fat is important because we want to be good stewards. Everyone knows my heart is for businesses, especially women-owned businesses, to not only survive but to thrive. Our numbers for starting businesses are off the chart. Our numbers are staying in business ... oh yeah, we got all the kinds of dots on the chart and we're not doing it as well as we could. So, know your numbers. But as we talk about what goes out of your business, we also need to talk about what's coming in your business. Managing your cash flow. Are you on top of your billing? Have you been letting clients slide or forgetting to invoice them? Yeah, that needs to stop now. And it shouldn't have started, but that's a conversation for another day.

[00:07:04]

So, I want you to communicate early and often with your clients. Make sure you are setting up the necessary reminders for yourself and your clients on your receivables. Communicate with new clients what your billing practices are so they know what to expect. Don't be afraid to offer a discount for early payments or better yet, a discount for prepayment of 3 to 6 months in advance. Clients like knowing they have your services secured, and some don't like monthly billing. You might be surprised, but they really don't. I have a client who pays in lump sums. She does not want to have a bill on a monthly basis, and I am excited about that. So, another way, though, to keep cash flowing in is to make yourself indispensable. Now, I'm not saying turn into one of those magical unicorns that people advertise for, but I am saying get creative. You know your clients. You know what they are struggling with, even be on what you may currently offer. Ask yourself, is there an opportunity to expand how I serve customers? How can you help your clients grow and optimize their businesses during this recession? Remember, you have the advantage. You know their business. You also know your expertise. So, don't shrink because of a pending recession. Channel your inner Rihanna. Shine bright like a diamond.

[00:08:59]

What are those opportunities for your existing clients? Past clients? Potential clients? How can you help your clients improve and optimize what they already have? I'm just in the process of booking a team training for one of my clients on how they can best optimize their team. You have people in place, we're about to head into maybe some economic uncertainty, but bringing in training to make sure that we're all communicating well, and doing things well, and that the team is cohesive, well, that makes us way stronger going into any level of economic uncertainty. So, remembering that you have this knowledge, you have this information on how you can help your clients grow. And like myself, many of you are in service-based, consulting-focused businesses. What can you do to help your clients do business more efficiently and effectively? How can you help them increase productivity and performance? If this was Jeopardy, I'll take operational efficiencies for 1000. Whether those operations are the actual processes in the business, people in the business, they all can use a good looking at. And who better to do that than you? And I want to remind you, don't sell yourself short. So many of us are in the space and we have so much other experience that may not be online-based, however, it is still experience. About two weeks ago, I'm a huge listener of Cameron Herald's COO Alliance, basically a podcast he has called Second In Command. I love listening to these Chief operating officers in large companies share things.

[00:11:05]

And I've always been struck that the things they're sharing are often the same problems I'm having with my clients, the same challenges I'm helping my clients with, the same things that I'm dealing with. Theirs is just on a larger scale. So, Cameron held an ask me anything session a few weeks ago. And I'm on it. In order to be a part of the COO alliance, you have to be with a company that's at least doing $5 million in revenue. And so, I was listening to these people, and there was one particular young lady who was speaking. And she's a new member, and she's talking about the president of the company she works at and just the challenges she was experiencing. And I was like, okay, you know how you're on these things, you're like, do I or don't I ask a question? So, I did, and I addressed it from the fractional COO standpoint, especially after hearing these things. Cameron loved my question; we went into some really great things that he shared. But the young lady and I decided to connect and got on a call together. I shared some things with her that she has now implemented in her relationship with her president and in her work as a chief operating officer. Could I have been intimidated? Oh, I have not worked with a client that has a $5 million business. Have I worked with government entities that had even $50 Million budgets? Most definitely. But I could have been intimidated. I could have shrunk. But no, I did channel my inner RiRi and I was like, Oh, well, let me share. And now, we struck up a friendship and we encourage each other. But I share that to say, larger businesses have the same problem, they're just on a different scale. That's what the difference is.

[00:13:07]

And when you realize that you guys will stop shrinking yourselves, you'll stop selling yourself short, and you'll stop thinking that you cannot help these businesses that are out there. So, the 2008 recession was really big, massive. But research shows us that companies actually outgrew their competitors during the recession. I'll say that again. There were companies that outgrew their competitors, outpaced them, out revenue, during a recession. So, McKenzie, a large management consulting firm, did a study that was shared in the Harvard Business Journal, and their research showed that getting ahead relative to peers even slightly during a recession gave companies an advantage that was tough to reverse when the economy started doing better. So, a slight advantage over your peers or for your clients over their peers during the recession gives an advantage that's tough to reverse when the economy is doing better. Remember, recessions don't last forever. Position yourself in your clients now for that winning that will take place at the end. Think about that. And there are different ways that you can show up for your clients in terms of thinking about some additional offers for them. These offers, you are not marrying them. They are not forever. They are not till death do you part.

[00:14:59]

They are offers that exist for a time being. They're helping you serve your clients in a different way. Heck, I don't care if you don't even put them on your website. They are your back pocket offers for when the need arises. But trust me, you talking about them, speaking to those pain points clients will find you wanting to know. "Hey, I heard you talking about X, Y, Z. Can you help me with that?" I most certainly can. You're going to need to embrace creativity and innovation. But you've got this. So, the next thing I'm going to share might surprise some of you. Don't stop marketing. I said it, I'm going to say it again. Don't stop marketing. Never stop marketing. I know that marketing is going to feel like that thing that you can let go of, but I'm going to need you to resist that siren call. You may need to trim it, but don't eliminate it. How will new customers know about your company of services if you stop marketing? Remember, marketing is a long game. If you stop, you have to start again and basically forfeit everything that you had done previously. And we all know “Ain't nobody got time for that”. Continuing your marketing assures current and future clients that you are built to last. You are here. You are not fly by night. You are not, "Oh my gosh, I am about to penny. The sky is falling. My business is crumbling." No, you are solid as a rock and you have cash reserves. You have managed your incoming cash flow and you are here for the long haul. And I want you to broaden some of those thoughts about marketing.

[00:17:00]

I'm not only talking about, "Kiva, I'm not trying to run paid ads right now." That's fine. There are other things that you can do to leverage marketing. What strategic partnerships can you forge now? Are there websites, groups, communities? We're all on Facebook in some community or another that you can get in front of, which gets you in front of more of your ideal clients at one time. That's less work than you doing a bunch of 1 to 1 individual outreach. Could you write articles for a trade or association publication related to your niche podcasts? Duh, hello ... a way to get in front of people. Webinars, free training, guest blogs, speaking engagements, but whatever you decide to do, make sure you're providing value and you're developing that relationship. Dare I say that you even consider giving away something for free? Yes, I did say that, didn't I? Emily Hirsch of Hirsch Media does this, and I think it truly endears her to her community. She puts out a quality resource and she doesn't require an email address. I'm going to say that again because some of you are sitting there dumbfounded. She puts out a quality resource and she doesn't require an email address. She actually serves her community. It pays dividends many times over. And just a quick note, I did say a quality resource. I didn't say just put together some stuff and throw it out there. These aren't free mints that you pick up after you've paid the dinner bill. A quality resource that provides value to your target audience. That is really important in actually serving right now, and serving your community actually will do wonders for you.

[00:19:09]

And speaking of those collaborations or relationships, don't be afraid to find some trusted partners, your ride-or-die recession folks. We know being a small business owner is a lonely journey. Don't do it alone. Look at your digital Rolodex. Who can you collab with so y'all both eat? Stop trying to be the holder of the table having all the food, others can eat as well. Maybe there's a client coming your way and you really only want to do a part of that job. Hire someone else in your circle to do the other part. You both eat; and some pie is better than no pie. So, who can you form a round table with so you guys can encourage each other through these times, serve as a sounding board, idea incubator? Find your tribe, not just for this recession, but for the journey. So, number four, get you some credit. Now. I didn't say use it, but I did say get it. If you don't know your business banker, go into the branch and stop doing everything online. That relationship is valuable. They will look out for you. They will keep you abreast of financial opportunities that you may not be aware of. And also, the best time to get credit is when you don't need it. So, remember at the beginning, I told you most businesses average 27 days' worth of cash reserve? A business credit card will help you get through lean months if needed. Like anything else though, you need to be wise with it. Don't overspend. And pay your bill early. And the fifth thing, knowledge is power. If that 5. Yes, the fifth thing. Knowledge is power.

[00:21:06]

We live in an increasingly knowledge-based world. During each of the last recessions, people turn to online courses to better themselves as they sought to be irreplaceable or prepare for a career shift. That industry is expected to continue to see growth. As a small business owner, you also have access to knowledge called analytics. Just like your financial numbers, you should know or have someone helping you know how to analyze your data. I'm currently taking a certification with Coursera and Google on more in-depth data analysis, and one of the guest speakers shared that having data is like having the answer sheet to the test. I'll repeat that. Having data is like having the answer sheet to the test. How would you or your clients run your businesses differently if you had the answer sheet to the test? I'm confident it would be different than it's being run now. And because I want you all to know, I'm not just giving my opinions here. I want to share a bit from a Forbes article by economist Bill Connolly. Another management consulting group, Baines, did an updated study on the McKinsey report I shared earlier from the 2008 recession, and they looked, (I believe it was 2019), basically at the strategic moves that companies made to reverse this recession. And one of them, they described as aggressive commercial plays. And their description of that was maintaining good management practices, investing in research and development, emphasizing top priorities for sales correctly, aligning locations with business potential, focusing on positive customer experiences.

[00:23:14]

They noted that these are not recession-specific behaviors but every day best practices. Just like the other tips I've just shared, they're everyday best practices for running your business. They are not recession specific. The key, though, they said, was doing these things or keep doing these things during difficult times. Management whose companies are weak going into the recession spend their days putting out fires, playing defense. Successful companies do more than keep the wheels on the bus, they also advance their long-run strategies. You might not be a large company, but remember you are Thomas the Train to our economy. Whether we are officially in a recession or not, the time to decide your offense is now, so that you can best serve yourself and your clients. Remember, little engines can do big things. Thanks for tuning into this episode. Make sure that you prepare you and your business for whatever is to come. And it's through the maintenance and maintaining of everyday best practices. Wishing you a profitable and productive Q3 and Q4. And I'll see you next time. Bye.

[00:25:06]

Thanks for tuning in to this episode of Collab With Kiva. Each of us has a different path and I hope that this episode gave you some takeaway that has left you inspired and motivated to keep pressing forward on your unique path. Make sure you subscribe so you don't miss out on any future episodes. And of course, your reviews on Apple are greatly appreciated. If you're a small business owner ready to start making data-driven decisions in your business and you know that without the data, you're really just guessing, make sure to visit my website, the516collaborative.com, and let's schedule a time to talk to make sure that you can harness the power of data in your business. I'll see you next time. Bye.

Meet Kiva Slade - the Founder and CEO of The 516 Collaborative. With a unique background in high-power politics on Capitol Hill and sixteen years as a homeschooling mama, Kiva found her calling in the online business world as a trusted guide for entrepreneurs looking to build the business of their dreams.

Kiva's work began behind the scenes, orchestrating the back end of businesses and managing teams. But her inner data diva couldn't help but notice that small businesses needed help harnessing the power of data for growth. So she and her team set out to uncover and tidy up the data required to enable clients to grow their businesses confidently and easily.