Being prepared is the only way to make it through an economic downturn and keep your business profitable. While it may be impossible to plan for everything, there are steps you can take to ensure you are as prepared as one can be.

Diversify Your Product Offerings

Offering additional products and services can open you up for new revenue opportunities. Choose items that would be of interest to your current customers. Think about upsell opportunities and complementary items that can be packaged with current offerings. If you’re a service-based business, consider incorporating a little retail by selling company branded items and the products you use through an ecommerce store. This way if something you offer becomes unnecessary during a recession, you will have other products and services to lean on to maintain revenue.

Expand Your Customer Base

While offering additional products and services may bring in some new customers, there are some other strategies you can use to generate business. A larger customer base not only helps to increase revenue, it protects you in the event of an economic crisis. If you have a bigger contingent of loyal customers, you stand the chance that not everyone in that base has been affected negatively by the recession.

Focus On Operational Efficiency

Hemorrhaging money on operational costs can spell disaster for small businesses even in a good economy. Ensuring that your staff has the knowledge and tools necessary to operate your business in an efficient manner allows you to save money and avoid damaging cut backs during a recession. Accounting software, clear policies, inventory management software and marketing automation can all lend themselves to a more efficient and effective operation.

Maintain Positive Working Capital

“Working capital is calculated by using the current ratio, which is current assets divided by current liabilities. A ratio above 1 means current assets exceed liabilities, and generally, the higher the ratio, the better.” Eliminating debt, operating lean and ensuring you have cash available for emergencies or improvements is essential in the case of an economic downturn. There can be an extraordinary opportunity for growth during a recession, provided you’ve take the necessary steps to ensure you financial stability.

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