Building Economic Resilience: Des Moines Businesses’ Blueprint for Recession Preparedness
The economy has been in an odd place in 2023 — with unemployment staying low, inflation running amok and the Fed raising interest rates in response. Most forecasts say the U.S. will have low GDP growth in at least the first half of 2024.
What can Greater Des Moines (DSM) businesses do to prepare for low growth and even a potential recession? Knowing the right moves that will make your organization more resilient can help you weather the storm and have a successful 2024, no matter the circumstances.
Whether you’re a local business like West End Architectural Salvage or a franchise like Insomnia Cookies, here are strategies you can use to maintain profitability — even in a crisis.
Focus on Cash Reserves
Having enough cash on hand can help you weather all kinds of downturns, including slow economic growth. Just as you might create a budget for your personal finances and find ways to reduce expenses so you can set more money aside, do the same for your business.
You can start by connecting with your creditors and seeing what you can do to lower your debt payments. Maybe you can work out a longer financing term, for example, but in this higher interest rate environment, it’s a good idea to avoid refinancing.
Manage inventory carefully and consider being stricter in customer financing if you offer it. You may also research suppliers to see if another vendor could supply similar quality at a lower price.
Having cash reserves can improve peace of mind and give you more flexibility if things get tight in the future.
Continue Building Strong Customer Relationships
Providing excellent customer service and building relationships with your customer base is essential during good times, and it’s even more important when money is tight. You can’t afford to lose existing customers, so focus on improving the experience buyers have with your brand.
You might decide to start a customer loyalty program, for example, or offer incentives through a referral program. Continue to provide high-quality products and services, and make yourself available to customers if they have questions or concerns. Encourage happy customers to leave reviews, and reply to every review so that potential customers see that you’re an active, friendly business owner.
Don’t Be Afraid to Ask for Help
Economic resilience isn’t something you build alone — it’s a group effort that helps our community’s businesses do well in challenging times. That means we rely on each other, and it’s OK to ask for help.
There are a variety of ways to get help for your business in DSM.
The Greater Des Moines Partnership offers online resources and can help you connect to partners who can help you grow and improve your business.
The Iowa Economic Development Authority (IEDA) can help you find business credit and support for your women or minority-owned company while also offering easy access to applications for federal funds you can use to innovate.
When future-proofing your business, remember to think about more than finances. For example, you may want to consider ways to grow your business while reducing your environmental impact. When you are eco-conscious, your business will appeal to eco-friendly customers, which can help you grow. To find support in these efforts, consider connecting with the Iowa Sustainable Business Forum. The Forum shares best practices in implementing sustainable business strategies to improve your impact on the planet and your bottom line.
Create Contingency Plans
Most small businesses will have a plan for evacuation in case of a fire or safety in case of a tornado. But many times, small business owners forget about other important contingency plans, such as continuity planning and succession plans.
Continuity planning allows you to create a plan for how your business would recover from various threats. You start by identifying potential threats, from natural disasters to cyberattacks. Then, you make plans to help prevent damage from those threats, as well as plans on how you would recover from any damage you suffer.
Succession planning allows you to plan for the sudden departure of key personnel. Create a list of employees and leaders who would create a significant void if they were no longer in their role. Consider how you might fill those vacancies. You can talk to leaders in your organization or a board of directors to get advice and help keep your plans in line with company goals.
Successful succession planning includes talking to key employees and having a clear understanding of their short and long-term plans. For example, if someone is planning to move out of state in the next few years, you’ll want to plan for their replacement so someone is ready to step up at the right time.
With the right plans in place, you don’t have to fear tough times. In fact, you might even find you emerge from an economic crisis stronger than you were before. Being proactive and making plans now can make all the difference when the pressure is on.
Looking for tools to help grow your startup or small business? Visit the Small Business Resources Hub to find the information you need, including connections through a Resource Compass and Business Counseling through the Greater Des Moines Partnership’s network.