7 Ways To Recession-Proof Your Business

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Declines in consumer confidence and decreased sales can threaten all businesses, but small businesses can be particularly vulnerable. They often don't have reserves to help them weather difficult times. From protecting your cash flow to building your customer base, implementing a few practices in advance can help recession-proof your business so it survives and even thrives during economic downturns.

Protect Your Cash Flow

Cash flow is the lifeblood of your business. Money must continue inflowing and outflowing for optimum business health, with the obvious goal being that you bring in more income than you must spend on expenses. You'll have expenses as long as your business exists.


It can be admittedly hard to keep the cash flowing in. Recession-proof your business by implementing strategies to keep the cash flow moving, from increasing sales or billable services to trimming unnecessary expenses.

Review Inventory Management

See if anything can be done to reduce your inventory costs without sacrificing the quality of goods sold or inconveniencing your customers. Maybe you're ordering too many of particular items, or something can be sourced somewhere else at a better price.

Is there a drop-shipping alternative that will work for you so you can eliminate shipping and warehousing costs? Just because you've always ordered something from a particular supplier or done things in a particular way doesn't mean that you have to keep doing things that way, especially when other ways can save you money.

Focus on Core Competencies

Small business owners often simplify the concept of "diversification," translating it to simply "different."

Simply adding other products or services to your offerings isn't diversification. At best, it's a waste of time and money. Worse, it can damage your core business by taking your time and your money away from what you do best, damaging your brand and reputation.


Drop the extras and focus on what you do best that's most profitable.

Win the Competition's Customers

You must continue to expand your customer/client base if your small business is going to prosper in tough times. This means drawing customers from your competition.

Offer something more or different than what the other guy does. Research your competition and see what you can do to entice their customers into becoming your customers. How are your competitors advertising? Visit their business locations. Ask consumers what they like or don't like about those companies, then tweak your own business practices accordingly.

Make the Most of Current Customers

We've all heard the old adage that a bird in the hand is worth two in the bush. The bird in the hand is your customer or client, and they're an opportunity to make more sales without incurring the costs of finding new customers.

Even better, they might be loyal customers, giving you many more sales opportunities. You can't afford to ignore the potential profits of shifting your sales focus to include established customers if you want to recession-proof your business.

The key here is excellent customer service. Ensure that your customers or clients love what you do or sell, and keep them happy. Yes, that means the customer is always right. Identify their needs, then meet them. You want to retain their business all costs. This is more important during a recession than at any other time.

Don't Cut Back on Marketing

Many small businesses make the mistake of cutting their marketing budget to the bone in lean times, or even eliminating it entirely, but this is exactly when your small business needs marketing the most.

Consumers are restless. They're always looking to make changes in their buying decisions. Help them find your products and services and to choose them rather than others by getting your name out there. Don't quit marketing. Step up your marketing efforts.

Watch Your Credit Scores

Hard times make it harder to borrow, and small business loans are often among the first to feel the squeeze, particularly for businesses with iffy credit ratings. Monitor yours frequently and keep on top of them. There are three major business credit bureaus and each assesses your business's creditworthiness differently:

  • Experian
  • Equifax
  • Dunn & Bradstreet


Keep tabs on your personal credit rating as well and do whatever is necessary to keep both in good shape.

You’ll stand a much better chance of being able to borrow the money you need to keep your business afloat if you have good personal credit as well. And keep in mind that the U.S. Small Business Administration makes easy-qualifying loans available during times of national economic crisis, in addition to its usual funding programs.

The Bottom Line

Nothing will make your small business 100% recession-proof, but implementing these can help ensure that your business survives tough times and possibly even profits from them. It all begins with analyzing how you're doing things now and looking for ways to improve.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Free Management Library. "Customer Service Management: Guidelines and Resources." Accessed April 18, 2020.

  2. Score.org. "Improving Your Business Credit Score." Accessed April 18, 2020.

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