How To Survive A Recession: Strategies to Help Your Business - HØJ

How To Survive A Recession: Strategies to Help Your Small Business Remain Alive


Time to read 6 min

It’s always worrisome to hear reports on a possible economic recession, especially in our turbulent post-pandemic world scenario where conflicting reports seem to emerge on a daily basis. 

Truth is, it can be tiresome to listen to some experts suggesting that risks are diminishing, while others warn that the worst may be yet to come, since inflation is still far from meeting the FED objectives and the interest rates remain high. 

Regardless of this confusing and concerning forecast, one thing is clear: preparation is key. 

In these challenging times, staying informed and taking proactive measures can make all the difference. But where do you start? Join us as we explore how to survive a recession with fundamental tools and strategies that will help you create a recession-proof business.

How to Survive a Recession: What is a Recession?

First things first, do we really know what a recession is or how it looks like? Bear with us as we get a bit technical.

In simple terms, a recession means a decline in economic activity. While a technical recession is formally defined as two consecutive quarters of declining or stagnant gross domestic product (GDP), it's important to focus not only on the duration, but also the severity of the economic downturn. 

Consider the COVID-19 crisis, for example, where GDP dropped for a shocking 31%, one of the most significant declines in modern history, only to rebound by an impressive 35% in the following quarter. 

Nowadays in 2023, in much of the western world the primary concern is inflation, largely attributed to disruptions in the supply chain during the post-COVID era, coupled with a surge in demand. 

To combat high inflation, the Federal Reserve announced a raise in interest rates, making credit more expensive and creating cash flow challenges in the local market. This has raised fears of widespread business bankruptcies, unemployment, and, inevitably, a decline in overall well-being for families.

Money showing recession
Money showing recession (Envato)​​

How Can A Small Business Survive A Recession?

Believe it or not, this also delivers an opportunity to grow stronger than your competitors. Here are some fundamental strategies to achieve that:

1. Protect Your Cash Flow

First of all, it's crucial to keep in mind that recessions, while challenging, are typically temporary. 

Historically, recessions have lasted from 6 to 18 months. This presents an opportunity to assess your business's profitability and identify areas for potential growth. 

  • Begin by creating a budget and sticking to it .

  • Examine how your profits are used. 

  • Craft a business plan that can provide insights into the real profitability, accounting for both peaks and valleys in sales, which will help you make informed business decisions.

  • During sales peaks, such as Christmas or Black Friday, you may consider investing excess cash in safe assets like treasury bonds. This strategy allows you to earn a steady stream of interest income from cash reserves that are not immediately required for day-to-day operations, taking advantage of high-interest rate scenarios. 

A quick note: It's worth noting that government investment is not exclusive to the United States; many countries offer inflation-protected bonds that typically pay returns on fixed dates. However, it's advisable to seek guidance, as interest rates and benefits may vary. 

2. Cut or Reduce Unnecessary Expenses

During periods of economic uncertainty, many small business owners have to deal with tough decisions that sometimes may be to the detriment of employees, suppliers, or even their own financial well-being for the sake of an enterprise. 

However, this can also be an opportunity to grow and improve. Reducing expenditures, while it's one of the first actions many businesses apply, has to be done carefully. 

3. Renegotiate Terms With Product Suppliers

During a complicated economic climate, everyone feels the impact. There's a chance that your vendors could be struggling with cash flow as well. In light of this, there's a possibility that they might be willing to renegotiate your contract conditions, such as prices and payment terms, instead of risking the loss of your contract entirely. In the end, it could be mutually beneficial. 

Now let's consider the scenario where your supplier is reluctant to renegotiate; in such cases, it's worth exploring alternative options in the market. Remember that many potential suppliers are often eager to welcome new clients in the middle of a recession. However, always keep in mind that delivering good quality products always represent the best option in the long run. Your clientele will be more satisfied and will be more inclined to return.

4. Avoid Unnecessary Debt

One of the main issues of a business during a recession is the lack of cash flow. Taking on new debt could exacerbate the situation especially considering that the difficult economic scenario was partially caused by the high-interest rates. 

  • Try to pay expenditures on time to avoid extra charges and penalties. 

  • Consider the option to acquire credit in P2P platforms, which typically offer considerably inferior interest rates and payment options than traditional bank loans.

5. Switch to Online Marketing

Another effective strategy to save money could be to move away from conventional marketing approaches, such as printing flyers or running newspaper ads, to online platforms and popular social media networks. This alternative offers affordability while its results become easier to monitor its reach and performance. 

Online media allows for diverse content creation, including posts, live transmissions, videos, and topic-related discussions, significantly increasing business visibility. 

Moreover, businesses can cultivate a dedicated online community by running promotions or contests, encouraging followers to share posts and tagging the business.

6. Protect Your Customer Base

Building a solid foundation of regular existing customers is a cornerstone for a strong business, particularly during a recession. Loyal customers have developed an emotional attachment to your enterprise and they're an invaluable asset that should be nurtured. 

In addition to the previously mentioned marketing strategies like running special sales or offers on social networks, consider implementing loyalty programs and extending special discounts to returning buyers or recommended clients, depending on the state of your inventory and financial numbers. 

Offering quality products is essential; your customers will know that their business is genuinely valued. Also, don't overlook post-sale strategies; actively encourage feedback and business reviews and be prepared to honor warranties or address any issues with your products. 

While it's impossible to maintain a perfect experience for each and every customer, your response to those situations can mean the difference between an occasional customer and a loyal one. Investing in customer satisfaction is not only a short-term strategy but also a long-term commitment that can dramatically fortify your business.

7. Improve Teamwork & Efficiency

Take advantage of your work team and their insights; your employees possess a unique understanding of how your company operates and involving them to identify potential areas of growth and solutions can be invaluable. 

Letting them know that they play an integral role in the organization's success could lead to substantial improvements in terms of efficiency. Consider reorganizing functions based on your employees' talents and interests to optimize their contribution. 

Just as customer retention strategies are important, maintaining a positive work environment is equally crucial. The difference between having an occasional employee and a loyal one can be as significant as the impact of customer loyalty. 

By emphasizing teamwork, recognizing individual strengths, and encouraging a positive workplace culture, your business can build resilience and efficiency, essential elements to recession-proof your business.

Recession graph
Recession graph (Envato)
Business man worried
Business man worried (Envato)

How to Survive a Recession: Some Final Words

We hope these tips can help you deal with any economic distress that may arise in the future, though we hope it won’t be necessary.

Here at HØJ we are dedicated to helping your business, so we invite you to stay connected with us on our social media platforms and through our blog, where we share valuable information about the cannabis industry.

Simon Folmann
Simon V. Folmann

Simon Folmann

Simon is an accomplished entrepreneur and inventor in the cannabis industry. He’s the founder and CEO of HØJ; a revolutionary high-end cannabis accessories company. His mission is to change the way we experience the herb and enhance people’s smoking experience through knowledge and unique products.

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Disclaimer: HØJ is not a medical advice blog, so please consult with a doctor or a specialist if you have any questions regarding smoking or anything related to cannabis consumption itself.

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