However, it’s not official until the National Bureau of Economic Research (NBER) says so! The official NBER definition of a recession is, “a significant decline in economic activity that is spread across the economy and that lasts more than a few months”. There are other factors involved but that is the jest of it!

While economists certainly know what a recession is, they can’t accurately predict when one will arrive, how long it might last, how big it will be, or how much negative impact it will have.

The good news is, if and when the NBER calls it an “official” recession, history has taught us a thing or two about how to handle your business during a recession.  History has also taught us, based on how you operate your business, not only who the survivors will be, but who the winners will be once the recession is over!

Small businesses by definition are small and mighty. They make up 44% of the economic activity in the U.S., but they are also more vulnerable to recessions and disasters. It’s primarily due to poor cash flow. 25% of small businesses don’t have enough cash to make it through a two-week downturn.

The first recorded recession in the U.S. was in 1797. Since then there have been 17 additional recessions and one depression (The Great Depression 1929-1938). The latest being in 2020, caused by the COVID pandemic.

While there are many steps that can and should be taken to weather the storm, most experts agree that the number one thing small businesses must do to survive a recession is to have a plan. It’s not too late. While it remains to be seen if we go into an official recession, starting to think about and plan now will help you navigate the storm if it hits.

We’ve compiled a list of 15 tips to help small businesses be better prepared to survive a recession. The #1 Tip is “Have a Plan”. It may seem obvious, but the companies that have an advance plan far outperform those that wait and go into survival mode once it hits.  Tip #2 is “Create a Cash Flow Plan”.  Running out of cash is always a concern for business owners, even more so during a recession. Get a handle now on your current cash balances and monthly sources of cash. Create a cash flow chart for the next three to six months to help guide you and that will help alert you to any variances.

While researching this topic, we read and analyzed over twenty different articles and looked at a multitude of research to create the 15 tips to help you. Another tip (#8) that nearly every expert mentioned was “Don’t Stop Marketing/Advertising”.

History has proved time and time again that the businesses that maintain and/or grow their marketing during the recession will far outperform the competition during and even more so after the recession has concluded.

We will visit that specific topic in next week’s SoundADvice.

To see all 15 Tips for Surviving a Recession, click here.

Note to Business Owners. You may be aware that the radio stations that provide these helpful articles to you also air promo ads on their stations that speak to each week’s topic. Since we don’t publicly want to talk about the “R” word, there will not be a promo ad airing on this topic.