We may not know when exactly it’s going to happen, but we do know that a recession can happen at any time, and staying prepared for the uncertainty of economic change can ensure you stay ahead of the curb. Leading economists believe that it could begin as early as next year, while others believe it has already begun. It may seem far-fetched considering the economy is currently doing well, but that’s precisely when business owners start to get lax and shortsighted. In the last recession, millions of Americans were left without a home, job, or business. If you want your staffing firm to stay afloat, it’s imperative you take a step back and look at your firm’s current state. Staying prepared makes the difference between how your business performs, and in turn, sells in the future. Preparing as early as now sets your business up for future sale.
Here are a few tactics on how to prepare for a recession:
Expand your contract business.
It can be tempting to focus solely on your staffing company, especially if the market has been doing well for the past decade or so. The market is steady, your staffing firm may be making good money, and it feels as if nothing could go wrong; except it could suddenly drop by 80% in a recessed environment. In preparation, it’s wise to keep a ratio of 65% contract, with the remainder perm. In times of uncertainty, businesses will look for workers who are flexible and versatile. Temp staffing is all about flexibility, so it can be expected that organizations will eventually look to contract workers when looking for fresh talent.
Have a robust set of recruiters.
During a recession, it’s normal for employers to drastically cut their costs and expenses, sometimes even to the point of laying some employees off. While it’s completely understandable to make this decision during a time of economic uncertainty, you must ensure that your chosen team of recruiters can walk the talk and still do business, even in a declining market. Make it a point to distinguish lax order-takers from those that will help your company thrive, in or out of a recession. This same set of top employees will eventually be the ones to help your staffing firm bounce back once the economy normalizes.
Pay off all your debt and lower your expenses.
It is of great importance that you pay out all debt to prevent getting paralyzed by repayments if and when revenue goes down. At the same time, assess your current expenses and eliminate unnecessary fixed costs and contracts you can't easily cut when profits start to decrease. It's these expenses and dues that ultimately cripple business owners during a recession.
Have a strong client database.
Ensure that your relationships with your clients aren't purely transactional; this way, clients are more likely to place their trust in your staffing firm during times of economic crisis, such as during a recession. Additionally, making sure that you're not reliant on just a couple of strong, loyal clients ensures you're not left completely vulnerable should smaller, unreliable clients suddenly decide to leave. The variety of revenue streams will help keep your staffing firm afloat.
Economic downturns are bound to happen and it’s always a good idea to be two steps ahead. With these long-term strategies, you can better position your firm for survival when the recession finally happens.
And when it does, you will thank yourself for preparing ahead of time.