Earlier in August, we received news the economy had contracted for two consecutive quarters, sparking a debate of whether we are in a recession. Many of our business owners have called to discuss concerns over slowing business conditions and cash concerns going forward.
Several months ago, I sent everyone an email stating a recession could come and a slowdown was almost a certainty. Let me repeat the steps I suggested back then:
- Raise prices on goods or services. Nearly every cost for business owners has increased, some significantly. This puts a strain on profit margins and future cash flow. Americans have become accustomed to the fact that higher prices are evident.
- Cut back on costs. Pay close attention to discretionary spending, cut these costs to conserve cash flow.
- Look at any service that is not profitable. If you have any services that are no longer profitable, either make them profitable or eliminate them.
- Envision new services. Think outside of the box on new or expanded goods or services that you can add or implement with little cost. Consumers will look for value in all they purchase, and may consider a more costly item if they feel it provides a solid bang for the buck.
In my opinion we may be or getting ready to be entering a very mild recession. Recessions are a period where businesses can fail or flourish. The difference is in the planning and management of cash flow and costs, and adjusting to take advantage of the inefficiencies in the market.
We stand ready as your partners to provide you with critical information needed to make decisions. Let us know how your business is progressing, and changes you have made in your business plan.
Hopefully, this recession or slowdown will have a shorter lifespan than the normal 11 months. Let us know if you have questions or need help.
Securities offered through Commonwealth Financial Network, Member FINRA/SIPC. C F Parks Inc is a Registered Investment Adviser. Advisory services and fixed insurance products and services offered by C F Parks Inc are separate and unrelated to Commonwealth.