Bonus Episode 4: Recession Proof Your Business

speaker 0:   0:00
Hi, this is Steven McClane. I host the finance leader podcast, and this is bonus episode number four. We are in tough times. We need to be more socially responsible than ever. And I believe it's best for business owners to invest in their teams instead of a government body, forcing them to do it this week. I want to talk to business owners. I want to encourage you to recession proof your business and when I mean by in recession proof is that you've been able to build up some cash reserves so that once the economy goes to a downturn that you're able to overcome that downturn and be able to continue to keep your team in place and be able to continue operations while the economy is recovering. Now I know this is easier said than done. Some people will make excuses, but there are some things you can do to weather future storms, and it's in the best interest of everyone as a business owner, if you can continue to pay your employees once a major event happens like the pandemic that we're going through now, I'll talk about specific challenges regarding publicly traded companies at the end because they have very different challenges than a small business owner. Now we have seen business owners get very creative to survive the economic downturn, so there are opportunities out there to bring in revenue when faced with disaster, We know we can innovate. Innovation has been happening all over the world. Right now, manufacturers are retooling. Restaurants are getting creative on how to serve their customers. The creative business owners with strongest mindset are finding new ways to serve their customers. And I believe that in the future that we need to do some of the following to better support our employees and to better provide an opportunity and a better chance for the businesses to continue operations while the economy is recovering. Number one And that is to set up a recession fund so you can become more fiscally sound. I know that that's going to be harder for some. I think that you just need to make that a top priority. Once the economy has turned around and you have your business back and you're able to continue operations like you did before. Now you need to be exploring new lines of business. You need to get creative. I know business owners have gotten creative over the last many weeks. They have found new ways to serve customers. They have found a new segment of customers, and those business owners were the strongest mindset who did not get complacent. Once the economy down turned and they got creative and they thought about what they could do and they thought about how they can keep their team together, they found new ways to bring in revenue again. That's not gonna be the same for everyone is gonna be dependent on where you are geographically and how much of a challenge your city and town had to face during the crisis. Now I understand that this is just a blanket statement across the board, and I'm challenging you to make that a number one priority is to set up some type of recession fund. Even if you have two months set aside for pay, that would be great. That would help you whether the storm and I believe that your team will be more loyal knowing that you have set that up as a priority, I think they will support it. They will know that you are thinking about them and you don't want to lay them off when an economy goes down like it has beginning in March of 2020 and going into April. And I believe ultimately it's the moral thing to do. I know that small business owners sacrifice every day, and I just believe I want to challenge you to work it and make it happen to you. Once we have turned this thing around, I also recommend that you partner with the Small Business Administration. They offer a variety of options and the variety of certifications that you can get in a variety of tools that they have regarding funding, recording, budgeting and opportunities to bring in business for you. And a good way to connect with people in your immediate area and also to connect you to resource is that you probably didn't realize that we're out there so again reach out to that regional Small Business administration office and just start to partner with them, meet with them and get into the programs that they have and just find out what they have to offer. Also, I want you to partner with your local bank, a bank that is partnered with a small business administration will be certified to deliver. Resource is on behalf of them, so it's good to reach out to them partner with them, show them your business plan. Get in with the small business advisor if they have one, and really start to get good new ideas flowing into your business so that you can create additional revenues, and then you can set aside those funds for when we go into the next recession. Along with that partnership with that bank, I want you to consider applying for Atlanta credit that you can have available and you can tap into when the economy has a downturn again. So again, we're going to set up a recession fund, and we're also gonna apply for a line of credit so that we can use also during an emergency. I want you to continually update your business plan, and I want you to make that a quarterly task. Continue to assess where your business is that assess where you are at assess the markets that have changed and maybe that are emerging in your area. You define new lines of business and just get creative. I want you to really tap into your mindset and start to think about the future and how you can overcome a crisis and really start to put those tools in place and build those relationships again. I want you to build relationships with the Small Business Administration in your area and also your local bank, the bank that you're using or specifically, and hopefully a bank that is partnered with the Small Business Administration so you can use those. Resource is apply for that line of credit that you can use in case of an emergency. Continue to update that business plan. I just want you to continually assess and figure out where you're at and have a plan in place for when you have to face a crisis again. All right, I want to mention a couple of things when it comes to publicly traded companies because they have a different set of challenges for becoming recession proof. Just the nature of publicly traded companies creates certain challenges. If they become cash rich with such a fund, then they may become a target for a takeover, especially if they have a large float of shares that's available. I believe that corporate boards may need to consider putting in some type of restriction on what percentage of ownership and investor can have. That will be one safeguard for a publicly traded company to be able to maintain a fund for them to survive during a recession. It also may require that we look at publicly traded companies different from a policy perspective, and that is what kind of incentives can we build in or protections for publicly traded companies in order for them to have a recession fund? Can we set that fund aside? And that is protected from some kind of takeover? Can that fund be on Lee used during times of recession? Can we build some kind of restrictions around the use of it? This, of course, requires government to intervene. But I believe that is that the best interest off the country and best interest of the organization that they can? Whether the storm, once the economy, has a significant downturn so that they don't have to lay off their employees so that their employees don't lose their income, and then those employees continue to meet the needs that they have at home and they can be able to continue to spend the disposable income they have, which will, of course, help the economy turn around a little faster. So I do believe that needs to be a top priority. But there are a couple things that have to change regarding these publicly traded corporations Now. Investors, of course, maybe apprehensive around this kind of policy, they may consider it too high risk, and you may find investors who would prefer to receive those funds in the form of a dividend. I understand that. I think going forward thing, investors are gonna have to change. And I think that as leaders and a publicly traded company and you decide to make your company more recession proof, I think you're gonna be looking to attract a different kind of investor who is more socially responsible and who is definitely on board were becoming recession proof so that you can continue to have the same operations during an economic downturn, or or at least be able to continue to operate as best you can. Maybe finding again a different line of business may be serving a different segment of your business. New customers who don't mind you setting aside that those kind of funds. I am curious if anyone out there knows of any nonprofits who definitely assess and give a grade towards socially responsible companies regarding becoming recession proof. I'm not sure if what's out there if anyone is doing the assessments on the publicly traded companies. But if anyone out there knows of an organization or non profit, or even a government organization who grades companies on becoming more recession proof, please let me know some back some feedback because I would be very curious about how they grade them and how they can become a partner to help grow this concept, because I think it's very important going forward so that when we have a significant event that companies are more able to weather the storm and not have to lay off people again. I am working on season number two of the podcast, and it is gonna debut on April 28th and I am looking forward to getting that content out to you. I really do appreciate all the feedback and please consider joining my free Facebook group. The link is in the description, and please continue to grow yourself and to grow others around you Now go do great things and set a really good example in this tough time. And I will see you next week. Thank you very much.