How Can SMBs Prepare For a Recession?

In a recent poll, three in five Americans believe that the United States is currently in a recession [1]. However, it is yet to be officially declared by the federal government. 

Inflation has soared to its highest rate since the 1980s, leaving many people feeling sour about their current financial situation. To save money, some Americans are driving less, avoiding organic produce, and looking for deals on everyday items.

Americans' concerns with prices continue to dominate the top issues of the week: 18% of people name "inflation/prices" as their most important issue right now, with jobs and the economy (12%) and health care (also 12%) in the second and third spots, respectively.

The debate over whether or not the US is in a recession is ongoing, with academics and economists split on the matter. Steve Hanke, professor of applied economics at Johns Hopkins University, believes the US is headed for a "whopper" of a recession in 2023. However, Nobel Prize-winning economist Richard Thaler says he doesn't see "anything that resembles a recession" in the US right now, pointing to recent low unemployment, high job vacancies, and the fact that the economy is growing — just not as fast as prices [2].

How will a recession affect SMBs?

While a recession can be bad news for businesses of all sizes, small and medium-sized businesses (SMBs) are particularly vulnerable. During an economic downturn, consumers may cut back on spending, causing a decrease in demand for goods and services. This can lead to lower sales and profits for SMBs.

It's important to remember that recessions tend to be short-lived and that businesses that are able to weather the storm can often emerge stronger than before. Plus, there are steps that SMBs can take to help minimize the impact of a recession, such as diversifying their products and services, reducing costs, improving cash flow, and building up cash reserves. 

Following a recession, you normally see a boom period, which means businesses set up for economic success with strong operating leverageare likely to see prosperity ahead. So, while a recession may have some negative effects on SMBs, there is also the potential for strong growth once the economy recovers.

Our position

At Epos Now, we understand that a recession can be difficult for SMBs. As well as offering affordable and easy-to-use point-of-sale (POS) systems, we also provide a range of resources to help our customers weather the storm. From advice on how to manage costs to tips on increasing sales, we're here to support SMBs through tough times.

"We believe that SMBs are the lifeblood of the economy. During a recession, the focus tends to swing to achieving operational leverage, which means the business maximizes the output of every cost it is exposed too.," said Richard Nolan, Chief Operating Officer at Epos Now.

"The use of technology in order to gain a competitive advantage has been proven time and time again. Entrepreneurs of all sizes continue to adapt to new processes through technology that supports them to achieve greater operational leverage with the results of our customers speaking of themselves.

“We want to do everything we can to help our customers weather the storm and come out the other side stronger than ever."

How to prepare

According to Gartner, the rates of inflation, geographical disruption, and other factors are not slowing down the investment in technology. They found that businesses that reduce their technology marketing expenditures in recession only to find that they have lost all key customers when the market bounces back. 

Sanil Solanki, Managing Vice President at Gartner, said: "Investing in the right digital initiatives at the right cost can blunt the negative effects of economic pressures in the short term and build long-term competitive advantage [3]."

If you're an SMB owner, take a look at our recession resources. From advice on how to slash costs to tips on boosting sales, we can help you get through these tough times.

Here is a list of resources that can help:

Cutting costs

• How to Adapt and Thrive as a Small Business in a Cost of Living Crisis
• How Businesses Can Mitigate the Financial Risk of a Recession
• How to Reduce Costs in a Restaurant
• How To Reduce Labour Costs

Increasing sales

• How to Boost Online Sales
• How Can Retail EPOS Systems Help to Increase My Profits?
• 8 Functional Reports You Can Generate in Epos Now

For more information on our recession resources, or if you have any questions about how a recession may affect your business, please don't hesitate to contact us. Our team is always here to help.