Is Your Business Adapting To The Coming Significant-To-Severe Recession?
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Just some quick Orange County economic stats comparing prices from a year ago...
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Gas prices are up 47% from last year this time.
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Rising home prices and high interest rates have slashed the number of home sales per month in OC by 30% from a year ago.
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That translates into $55MM in lost sale commissions for the 26k OC realtors, $2.5MM for the over 100 OC moving companies to name the MONTHLY economic hit local to OC in those two niches. That money is just from 2 niche industries that has disappeared!
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The U.S. Officially entered a recession in the summer of 2022.
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The U.S. National Debt is now over $31.1 Trillion That will cause higher inflation and higher interest rates than we have now.
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OC home prices are 10% higher than last year.
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And all that trickles into a much larger loss for everything associated with the housing market during a severe economic downturn. Service industries, Restaurants, Gyms and Spas, Home Repairs, everything gets affected.
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Rents are up 22% from last year this time.
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Basic food items are up 6% from last year.
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There's been no real movement in wages to cover this 12 month impact (just 4% average weekly increase).
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Taxes remain insanely high here in OC
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Stock market losses are at 11%.
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Bitcoin is down 65%
What Is Your Business Plan To Survive This Unavoidable Event?
Things Your Business Can Do To Survive:
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Mind the budget. Frequently reevaluating expenses, particularly fixed overhead costs like rents (can you downsize?), utilities (can you cut back?), property and equipment (Should you sell off non-performing or non-necessary items?).
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Be prepared to cut all nonessential expenses like travel, entertaining, meals, etc. that do not contribute to proven revenue streams.
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Prepare and analyze your monthly P&L’s and continually adjust your spending.
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Have a way to measure what your return is on your marketing/advertising expenditures are.
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How do you know what you’re spending on marketing is actually bringing in a profitable return?
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Recession planning should include myriad alternatives to lower expenses. For example, identify areas of your business in advance where you can save money without hurting operations:
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Discretionary spending is a good place to start. Business travel or perks like free lunches can go on the cutting board.
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Paid advertising can take a backseat to more organic options.
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Research alternative suppliers and their prices to have at the ready should you decide it’s time to switch vendors. But check with your current suppliers first: They may be more open to negotiating their prices, even if just by a little bit, in order to keep your business.
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Similarly, consider asking the landlord to lower your rent payment, or reduce the amount of space your operation needs to occupy.
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Replacing long-term contracts for supplies and services with pay-as-you-go contracts is another cost-cutting measure.
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Consider ways to save by using technology and automation to boost productivity, whether for product manufacturing or back-end internal processes like accounting. Technology can free employees from handling routine matters so they can focus on increasing sales.
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As a recession endures, there could come a time to trim employees’ hours or salaries. Layoffs could ultimately become necessary. Be sure to treat employees with respect, and you may be able to rehire them when the economy improves.