Business owners brace for “deep recession”

Two-thirds of business owners across America are bracing for a “deep recession” over the next six months, according to a new Nationwide Retirement Institute survey. Of those business owners who expect a recession, “72% believe it will be similar or even worse than the Great Recession of ‘07-’09”. Of the 800 small and mid-market business owners surveyed, their concerns were all similar: inflation, rising interest rates, market volatility, access to capital, and continuing employee benefits. There is a 61% chance of a mild slide this year, according to those surveyed by Wolters Kluwer Blue Chip Economic Indicators.

Your concerns may also include growing your book of business, assets and maintaining liquidity of funds. As you project into the latter half of the year, you may want to consider growing your cash reserves and running your books based on more conservative projections. If you haven’t already done so, setting aside six months of expenses in a high-yield savings account as an emergency fund can be a common sense first step. If you haven’t ever run a budget before, now is the time to do so.

There are excellent free tools out there. Whether you prefer to use a spreadsheet online or a web-based budgeting app, making a budget before the next month is crucial. Then stick with it. Sure unexpected expenses may arise, but once you’ve prepared a budget for at least three months, you will be able to more accurately project for those in the future. If you own a small handyman business, chances are you can tell when you’ll need a new tool before accepting a new job. Writing down a budget and preparing for a potential downturn in the economy will allow you to save more money now.

Here are three strategies surveyed business owners are using to prepare for a potential recession: reducing expenses, using personal savings, and meeting with a financial professional. Which strategy will you use? Are you using a combination of the three strategies?

As you prepare for the potential future, you may also want to reexamine how well your business is protected. Is your succession plan set up? Is your business properly covered? Now is the time to ask hard questions and reexamine how well your business is protected. Here at Staggs Financial Services, our licensed financial advisors can help. You can schedule a free consultation today.