Don't just sit around waiting for the shoe to drop. Instead, take control of the future by recession-proofing your business.
1. Maintain a cash war chest.
Have cash. I can't stress enough how important this is. Regardless of whether you have been in business for one year or 50, have enough cash that you can weather a storm. Have more cash than you had last year. Have more cash than you think you need. Write down all the ways you can access cash.
Do you have cash in the business bank account? Money owed to you from clients (accounts receivable)? A line of credit? Are the founders of the business willing to put in personal cash? Do you have funding?
Know where all of your lines of cash are, and how liquid each one is. If you need to tap into your line of credit, how many days would that take?
Don't pass this simple yet foundational step. Having cash to weather a storm means you can think long-term and strategically even if you lose a key client or fail to drum up enough new business.
2. Diversify your customer base.
If your biggest customer goes away overnight, or defaults on payment for goods or services you've already provided them, you need to be able to survive.
Every month, run a revenue report that shows you the breakdown of revenue per customer. Ask yourself: if the revenue from the top customer disappeared overnight, what would happen? If the answer is "we would not survive," then prioritize adding on additional customers so you can diversify your customer base.
3. Prioritize stickiness.
The stickier you are with your customers, the more recession-proof your business is. Being sticky means that when push comes to shove, getting rid of you will be painful for your customer. The more of a hassle it is for your customers to stop using your product or service, the more likely they are to stay with you during a recession. This is true for B2B and B2C. Inside each industry, there are huge variances in terms of what's possible in terms of stickiness.
If you sell more than one product or service, prioritize selling the stickiest ones. If you have some customers who find your product/service more sticky than others, prioritize selling to this group.
If you have any contracts with your customers, this is a place you can increase stickiness. For example, if you sell monthly subscriptions, you could automatically renew unless the customer opts out.
One note here: never do something that's illegal or unwelcome. For example, never hold your customer's data hostage or make it impossible for them to discontinue being a customer. Stickiness is a priority, as long as it doesn't cross the line into doing the wrong thing by your customer.
4. Always have a Plan B.
Assuming you've got cash reserves, customer diversification, and stickiness, the final step to recession-proofing your business is having a Plan B. This can take many forms. It can be a contingency plan, or it can involve changing the rates for your product/service.
Take the time to formulate and write down a backup plan. Then set tripwires. A tripwire, as described in the book Decisive, by brothers Chip and Dan Heath, is a trigger you set ahead of time that cues you into action. A fire alarm is a tripwire. If it goes off, you know you need to spring into action.