A recession is characterized by a period in which business activity is significantly reduced and the economy as a whole is shrinking. This can result in a decline in investment, consumption and trade. A recession can affect almost all industries and businesses.
Business owners and managers must prepare their companies to thrive and survive the next recession.
Even if your business is not directly affected, it’s still a good idea to find ways to protect yourself from negative effects.
Businesses can take a variety of measures to avoid losing money or having their growth stunted during a downturn. They are referred to as “recession-proofing” measures because they protect your business against the effects of a downturn.
Discover some tips to help you recession-proof and grow your business no matter the economic climate.
Carpenters face a number of cash flow challenges
Cash flow is a challenge for carpentry businesses due to irregular income, seasonal fluctuations and unexpected expenses. You may face a drop in sales during the winter or unexpected repairs to your equipment that will impact your cash flow. You need a plan to manage your cash flow that will help you overcome any challenges.
Diversifying your services is a great way to handle irregular income. You could, for example, offer custom furniture design along with your carpentry service. You can attract more customers and increase revenue by doing this. Plan ahead to help you manage seasonal fluctuations. You can plan ahead if you know your business will slow down in certain months.
1. Improve processes by assessing them
In a recession, cash flow can be strained. It’s therefore important to optimize existing processes in order to reduce costs and maximize your assets. Take a look at how your company is currently running.
What improvements could you make to save money or time? What assets could you use more effectively? How would you rate your management or customer service practices?
Assessing the time it takes to manufacture a product is a good way to reduce costs. Break down each step and look for ways you can cut even a few seconds from tasks or parts of he system.
Keep your workspaces, workshops and warehouses clean and clutter-free. Even small changes to improve the flow of these spaces can be helpful.
Organise and label all your wood, including offcuts. Consolidate your stock and use creativity to turn offcuts or old stock into cash. Sell random wood packages – woodworkers, hobbyists and woodturners are all happy to buy random wood.
Evaluate if the waste can be recycled. It is important to recycle, resell or repurpose waste like wood shavings and sawdust.
Here are a few areas where you can improve in order to reduce costs and increase profits. To successfully recession-proof your business, you must also ensure that it has the flexibility to adapt to changing conditions.
It’s impossible to predict the future. However, it is important to monitor economic indicators. You can then make necessary adjustments. You should be paying close attention to the interest rates, supply and demand in your local markets or specific industries. You can get a sense of where the economy is headed by keeping an eye on the interest rates and supply/demand levels in your local or industry-specific markets.
2. Budget your expenses
Budgets help to create financial stability. This tip is at the heart of good business hygiene. To ensure that your business is well-positioned in case of a recession, it makes sense to stay within budget. It is always a good idea to follow a budget plan or operating plan. Some recessions like the one that was associated with the COVID-19 pandemic come without economic early warning signals.
A budget helps you to track your expenses, create an emergency fund and save money for big expenses like a home or car. A budget can help a person to be more financially stable in the short and long term.
3. Limit Marketing Investments
In a recession the best way to protect your cashflow and save money is to cut back on the marketing budget. Cut back on advertising.
It is a great way to protect yourself from the effects of recessions, and also to increase your cash flow. You may be able defer marketing investments depending on what you sell.
If you sell products you know won’t be in high demand, you can defer new campaigns on advertising until the demand for those products increases again. Your advertising budget can be used to target the products and services most desired by your customers.
It can also streamline production and lower costs, especially if your product line is diverse. This can all be done to conserve cash during a downturn.
It may seem counterintuitive to stop your marketing and promotions. You still need to be the person people go to in an economic downturn.
You just need to assess your marketing strategy, and focus on what works. Sites like Wooduchoose.com, which offer free lead generation and promotion services, can be of assistance. We offer digital services that are tailored to our industry. We can also conduct a free web appraisal and give you valuable insights on search engine optimization.
4. Invest in Technology
A company’s technology can be a vital part of its infrastructure, particularly if it is heavily dependent on digital technologies. It’s important to invest in new technology during a downturn to increase efficiency and cut costs.
This is a great strategy to protect your company from the effects a recession. Look for ways to reduce costs and increase efficiency in your company. Also, invest in new technology that will help it run smoothly.
Consider investing in digital workflows to help your team be more efficient and save you money.
The use of technology can help protect your business against the effects of recession. We are experts in the field and can provide you with more information and options for free.
5. Diversification is the key
You can use a recession to find new growth areas and diversify your business. You can find ways to expand your business into new markets, attract new customers and create new products or services. This is a great strategy to protect your company from the effects of recession.
Diversification will help you to reduce your dependence on a single industry. It is a good way to protect yourself from the effects of recession.
6. Insurance Matters
Businesses that are having cash flow problems in this climate should be aware of the options available to them for maintaining coverage during these difficult times. Check your insurance policy to ensure you are covered adequately. You want to be covered in case of unforeseen events, especially if money is tight. General Liability is one type of insurance.
While you may not be in a position to prevent a recession from occurring, adopting certain strategies can help minimize the impact of upcoming economic downturns on your family and yourself. Don’t forget to protect yourself and your contracting company while you grow your business. You can quickly compare carpenter insurance online with BizInsure.
7. Examine your finances
It’s important to monitor your finances, even in the best of economic times. It’s important to keep a close eye on your finances during a recession.
You can do this in a number of ways. You should always monitor your cash flow, for example. Tracking your expenses and analyzing your debt will help you to ensure that your financial situation is sound.
Set triggers and markers to help you determine when to act. If your cash flow falls below a certain level, for example, you should take immediate action.
Are you getting value for money from your subscriptions, regular fees and costs?
8. How to make the most of existing assets
It’s important to use your creativity to maximize the value of assets during a recession. It is possible to cut your operating costs by reducing unnecessary expenditures or increasing efficiency.
This can include finding ways to boost revenue without increasing expenses. We can also help you here, as we have already mentioned. Join our timber industry marketplace to get in front of the right people. Join now to get started
9. Be patient
Many studies show that family businesses of medium to large size are better able to weather economic downturns. It is partly attributed to the fact that multiple generations have the wisdom and the experience to ride out the ups-and-downs of business cycles. Their ability to be patient is supported by their levelheaded crisis-management and long-term outlook, as well as the foundational support provided by lower debt levels and a lack of external shareholder influence. But it’s important to keep in mind that complacency and patience are two different things. It is important to remember that patience has prerequisites. You must follow enough of this list’s advice to ensure your business is in a position to be able to demonstrate patience.
A recession is a great time to make positive changes in your business. This can help you protect your business and improve your bottom-line.
You’ll want to pay attention to the economic indicators and implement these tips in order to weather the storm. You can now prepare your business for any economic downturn by learning how to recession proof your wood business.
We owned and ran a woodworking company and have been through many of these downturns. We’ve learned so much from not acting, mostly! We are happy to assist in any way that we can. Take advantage of our free consultation. It’s a meeting/call online that could mean the difference between thriving or not.