Those feeling the pinch of these uncertain economic times may take issue with the old adage that the beauty industry is recession-proof. Being recession-proof, says Strategies’ Neil Ducoff, has nothing to do with the industry and everything to do with business planning.
While he warns there are no quick fixes, Ducoff does believe you can begin the process of recession-proofing your business at any time. “All it takes is a plan, some time, and discipline,” he says. Here are his strategies to recession-proof your business:
• Create a cash-flow plan. Decide how this month’s revenues will be spent before the month begins. Write it down so you can tell every dollar where to go instead of wondering where it went. Then stick to it. Live within the cash-flow plan and you will be amazed at how quickly the profit you projected shows up at the end of the month.
• Create a cash reserve. Having a little cash set aside will help you cope with the unexpected equipment failures and other rainy day occurrences that can happen. A separate money market account works best. Believe me, it will rain. Having this cash umbrella will prevent you from getting soaked.
• Get rid of the debt. This is what got you here in the first place. Credit cards, loans, and other debts rob a business of its most powerful wealth-building tool — its revenues. How much financially stronger would your business be without all of that debt? Make a plan. Pay off those credit cards one by one and attack the loans with a vengeance.
• Make that small cash reserve bigger. Now that the debt is out of the way, go back and beef up that cash reserve account. Having three to six months of operating expenses set aside is a great insurance policy against anything that might come your way, even a recession. It also provides many nights of restful sleep.
• You did it. If you get to this point, it is safe to say that your business is recession-proof. Now, get to the business of growing your business, offering the perks and benefits to your staff that you always wanted, and enjoying a business that gives you positive energy instead of stress.