I’m sure we’re all weary of the possibility of a recession coming sometime this year. Recession does sound scary, and they definitely can be if you’re not prepared for what’s coming. So, Julia and I decided the best topic for January’s Beyond the Books session would be recession proofing and cash flow planning. Let’s talk about what that entails.
The first thing we want to clear up is that recession proofing means taking action, not just going with the flow or carrying out business as usual. It also doesn’t mean that you have some kind of immunity shield either, as nice as that would be. What it does mean, is surviving and maybe finding some new opportunities. The best two ways to do this during recession are to stay on top of challenges and stay away from more debt.
Cash Flow Planning
Now here’s the kicker, how do you manage your money when you need to keep your business stable now and still save for when it isn’t? The first and most obvious answer is not to splurge. Of course, you still have to spend money to keep everyday business going, but now is not the time to pay off all your debts early or purchase unnecessary new equipment. Instead, hang on to that cash in case you need it later down the road.
The next thing you want to do is take a hard look at your products. Consider trimming any of the slow-moving products that tie up cash. Find those best sellers and make sure you have the funds stashed away to reorder that inventory. If you feel confident enough, you might even consider safe new variations of these popular products.
You’ll also want to look at your pricing. Suppliers have increased their prices, but have you? Can you afford to spend more than you’re making? Dig into your COGS and compare with your pricing. You may want to do some A/B testing to see if you can adjust your price.
The last and again more obvious answer is to cut expenses. Look at negotiating your terms with suppliers. Find areas where you can cut or reduce the expenses and examine your costs to make sure they’re worth the price. You can also apply these methods to your personal finances and make sure your family stays afloat as well.
We had a great Beyond the Books session today discussing these suggestions and hearing concerns from bookskeep’s women clientele. It’s always a fun time with a lot of learning and I’m excited to see what next month’s session has in store for us!