How to Prepare Your Encinitas, CA Small Business for an Economic Downturn

No one likes to think about tough times, but as a small business owner, it's important to be prepared for anything. The economy has been good for the past few years, but there are signs that a downturn may be on the horizon. Here are a few things you can do to brace your small business for an economic downturn courtesy of the Encinitas Chamber of Commerce.

Keep Your Best Employees

In tough times, it's more important than ever to keep your best employees. These are the people who will help you weather the storm and come out the other side stronger. Plus, it’s much more expensive to hire new talent to your team than retain your existing staff. Vantage Point suggests offering them incentives to stay, like bonuses, work from home opportunities, or extra vacation days. And make sure you keep communication lines open so they feel valued and supported.

Reduce Debt and Cut Expenses

One of the first things you should do in an economic downturn is reduce your debt and cut expenses where you can. This will help free up cash flow so you can weather the storm. Look at your budget and see where you can make cuts, even if they're small. Every little bit helps.

If you don’t know where to begin when it comes to trimming the fat, hiring an accountant to look over your books could be a worthwhile investment. Their service won’t be free, of course, but spending a couple hundred dollars to see exactly how to save thousands of dollars and put your business in better financial standing is money well spent.

While you are reviewing your finances, take time to make sure your filing system is well organized. If you haven’t gone digital yet, consider doing so now. Not only do e-files take up less space, they are searchable, which can come in handy when reviewing expenses. And if you find that there are extra pages in your PDF, just remove the page using an extraction tool. Then, you’ll have only what you need and you can add it to a more efficient filing system.

Update Invoicing for Quicker Payments

In an economic downturn, your clients may be slower to pay their invoices. To account for this, update your invoicing so that payments are sent out and due quicker. This will help ensure you have the cash flow you need to keep things going. You may also want to offer discounts for early payments.

Re-Evaluate Your Business Structure to Save Money

Take a close look at how your business is structured and see if there are any changes you can make to save money. For example, if you have brick-and-mortar locations, could you downsize or move to a cheaper location? If you have employees, could you reduce hours or allow some to work from home to lower on site costs? These are tough decisions, but they may be necessary to weather an economic downturn.

Create New Revenue Streams

In an economic downturn, FreshBooks encourages small businesses to get creative with your revenue streams. Look for new ways to bring in money, such as offering new products or services, partnering with other businesses, or even starting a new business altogether. Diversifying your income will help cushion the blow if one of your revenue streams dries up.

Update Your Marketing Strategy

When spending is tight, it's important to make every marketing dollar count. That means being strategic with your marketing efforts and targeting only those platforms and strategies that will reach your ideal customer. This is a good time to take advantage of any free promotional channels you haven’t yet, like by creating social media profiles for your company on Facebook, Instagram, and Twitter. You may also want to consider discounts or promotions to attract new customers.

Position Yourself to Succeed

No one wants to think about an economic downturn, but as a small business owner, it's important to be prepared. By taking steps now to reduce debt, cut expenses, and create new revenue streams, you'll be in a better position to weather any storm that comes your way. And utilize free tools that can help you, whether they are PDF editors to help you reorganize your files or marketing tools that generate beautiful social media posts quickly. Gather your resources and do your best to keep your footing during difficult financial times.

If you’re ready to grow your business with the help of great local resources and partnerships, join the Encinitas Chamber of Commerce.