How to Make Your Small Business Recession-Resistant

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It’s essential to be prepared for anything as a small business owner, including economic downturns. There are many things you can do to make your business recession-resistant to the impacts of a recession, and we’ve compiled a list of the most important ones below. By taking some proactive steps now, you can help ensure that your business weathers any storm ahead. Read on for some pointers.

Forming a New Legal Structure 

One way to protect your business during a recession is to form a new legal structure. This might include establishing an LLC, which can yield several tax advantages. Operating as an LLC can also help shield your personal finances from any potential problems your business might face. 

Speak with a lawyer or accountant to see if this is the right move for your business. And consider hiring an online service to form an LLC in your state; this route is significantly cheaper and can relieve a lot of stress. 

Keeping Documents Organized 

During a recession, it’s more important than ever to keep track of all your business-related documents. Digitize your documents and keep everything organized in one place so you can access them easily. This can save you time and money if you must go through auditing or other financial procedures during a recession. It can help you secure funding more easily too. 

Getting Financing 

If you’re having trouble getting financing from traditional sources during a recession, other options are available. You may be able to get a loan from the Small Business Administration (SBA) or another government agency. You could also look into alternative lenders, such as online lenders or peer-to-peer lending platforms. Checking your credit report before applying for financing to start or expand your business can help ensure that your credit history is accurate and can increase your chances of getting approved for a loan.

Building Cash Reserves

It’s always a good idea to have cash reserves on hand, but it’s especially critical during a recession. That way, if there’s a decrease in revenue, Lendio notes that you’ll have the funds available to cover expenses and keep your business afloat until things turn around. Aim to have enough reserves to cover at least three months of expenses.

Improving Your Wages and Workloads 

If revenue decreases during a recession, one way to cut costs is by increasing wages and workloads (within reason) for employees. We know it sounds counterintuitive. But keep in mind that it’s much cheaper to keep your current employees than to recruit and onboard new people, even when you consider raising wages. If possible, try to negotiate with employees ahead of time so they’re aware of the potential changes and can make necessary adjustments in their budgeting and workday.

Using Technology To Your Advantage 

Technology can be a great ally during a recession. There are many ways to reduce costs and increase efficiency through technology. For example, HP points out that you can use cloud-based software instead of purchasing expensive licenses for programs that are only used on one computer. You can also use video conferencing instead of traveling for meetings, saving time and money.

Reducing Debt and Cutting Costs 

If you’re already in debt, take steps now to reduce it as much as possible before a recession hits. This will help free up cash flow so you can more easily weather the financial storms that come your way. Negotiate with creditors for lower interest rates or extended payment terms. And look for ways to cut costs in your business, such as through automating tasks or renegotiating supplier contracts 

Fostering Customer Relationships 

One of the most important things to do during a recession — or really at any time — is to cultivate relationships with your existing customers. Make sure they know they’re valued and that their satisfaction is always your top priority. Your customer base is one of your most valuable assets, and by taking care of them, you’ll help ensure they stick with you through thick and thin.

Make Your Small Business Recession-Resistant

Make Your Small Business Recession-Resistant


There are many things small business owners can do to business recession-resistant proof their businesses. By taking some proactive steps now, you can help ensure that your business weathers any economic downturn. 

From forming a new legal structure for your business to raising your credit score to access financing, there are numerous ways to prepare your business for tough times. Follow the tips above, and your business and team can flourish no matter the state of the economy!


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