Forbes Magazine is reporting that 75 percent of economists are now predicting a recession before 2021. During the Great Recession of 2009, many small businesses were hit very hard, not only in a loss of sales but also in the ability to borrow. During the Great Recession, lenders tightened credit, leaving many small business owners scrambling.
What Are the Signs of a Recession? –
PBS spoke to an economist who cited the federal deficit rising much higher than expected, due to a huge tax cut for the wealthy that lowers government revenue, a spending bill that raises government spending and an economy that is slowing, due to tariff wars. According to the economist, Maya MacGuineas, the government will not have the means of borrowing to keep the recession at bay.
Forbes also stated that both debt for businesses and consumers are at even higher levels that they were at the time of the Great Recession. Simultaneously, the first effects of the tariffs in higher prices from the global trade war are just now going to hit consumers.
Back in February, when Fortune Magazine reported that 7 million Americans were 90 days or more late on their auto loan payment was really the canary in the coal mine. When people cannot make their payments on such an important need, that is a warning sign of the softness in the economy. Only now are more in the mainstream media stating the truth that the economy is in really precarious shape.
How Can I Protect My Small Business? –
Some of the key points in the Forbes article to help small businesses get through the recession include:
- Diversify and don’t count upon a few clients for all of your income
- Perform a SWOT – or Strength, Weakness, Opportunities and Threats analysis of your business, such as explained in Business News Daily
- Focus hard upon customer success
- Avoid offering too many different types of products or services, focus upon where your business does the very best
Also, in light of the tight credit market from the past recession that made borrowing tough for many small business enterprises, the time to borrow is likely now, if you have legitimate credit needs that you were thinking of holding off on.
Now that the truth about the economy has finally made it to the light of day, small businesses must take the steps to gird themselves for another tough time.