How to prepare for recessions in advance

Illinois business owners may be well advised to hope for the best and expect the worst. As the economy is cyclical in nature, there are likely to be down times in addition to the prosperous economic times. One way to account for a recession is to offer a variety of products or services. A diverse product or service line may lessen the overall effect of an economic downturn.

Business owners are encouraged to continue advertising during an economic downturn. This is because customers may equate a less visible company with one that is in trouble. If customers feel that a company may not be around much longer, he or she may opt to patronize a more stable business instead. Therefore, a business plan should include a stable advertising budget in good times and in bad.

Companies that are leaner and have greater liquidity tend to do better during recessions. While no observer can always predict when a recession will hit, it is possible to consistently take a look at the balance sheet. Reviewing corporate assets and liabilities may make it easier to identify assets that could be sold or functions that could be outsourced to save money until the economy starts to improve again.

For owners of start-up companies, it is important to think about how their business would respond to a recession. It may be possible to structure contracts with vendors or employees to give the company as much financial flexibility as possible. Legal counsel may be able to help create those contracts or review them to ensure that they comply with the law

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