There are so many business owners and entrepreneurs who are #killingit out there today. But the majority of them started business after the 2008 financial crisis. In fact, some of them started their business after college, when normal jobs just weren’t available and they had to adapt. As a result, they have no idea what it’s like to own a business during a recession. They may have started at the onset of the recovery, but they’re not truly prepared for the effects of a recession.
That’s why today’s episode is dedicated to asking the question: Is your business recession-proof? We’re not trying to scare you with this, but another recession is coming.
[00:56] Why you need to prepare for a recession
[02:47] The insights that financial advisors have into recessions
[04:21] How Dustin + Danielle structure their business to be recession-proof
[05:31] How technology parallels the impact of recessions
[06:32] How recessions are like the tide
[07:54] The risks of remaining ignorant of impending recessions
[10:07] Why you should be using this information to gain an edge
[13:05] What stops biz owners from preparing for a recession
[16:28] Why you should be looking at technology as a potential competitor
[20:08] Why in the world you should start investing when the stock market is on the rocks
[22:49] What “normal” recessions look like (and how they’re different from 2008)
[25:16] The real way to recession-proof your business
Some of you reading this, or listening to this episode, might be thinking you won’t be affected by a recession. Some of you might even think that a recession isn’t likely because “2008’s was so bad.” Well, my friends, we’re sorry to tell you that a recession is, in fact, coming. And soon. We obviously can’t predict when things will take a final downturn, but historically speaking we are “due” for a recession.
As CERTIFIED FINANCIAL PLANNER™ professionals, we’re trained to prepare for this moment, and to help our clients navigate through it. But more than that, it’s also our job to help clients prepare for a recession. Even though you’re not a client, we figured this information was too valuable to keep close to the chest, so we’re shedding some light on how to prepare your business for a recession.
Instead of acting like a recession won’t happen — or that it won’t happen to you — let’s really talk about what to do so you can prepare. We know that it can sound overwhelming and downright scary to recession-proof your business, but we don’t think it has to be.
In fact, Dustin loves talking about recession. He’s worked through one himself and came out on the other side with some really great ideas for building a recession-proof biz (which he has, here at Toujours Planning). So what are our big recommendations? We dive into them in the podcast, but here’s the gist:
What are you offering that’s different from your competitors? Are you poised for an influx of customers or clients when things go sideways? And do your audience or customers know that they can trust you to provide a great service or product, even when money gets tighter? Remember: recession-proofing your biz isn’t just about the financial side of things; it’s about making sure your clients/customers know they want to keep working with you.
Can you image technology replacing your products or services? Most people can’t, but that’s exactly what happens during a downturn economy. Businesses and consumers start looking for ways to cut costs, and sometimes that means turning to technology to do what you used to make money doing. Dustin had to deal with the rise of robo advisors (that’d be a cool book title) during the financial crisis and many brick-and-mortar businesses had to deal with online businesses taking their sales and customers. Are you ready for a shakeup?
Are your competitors prepared for a recession? Like you, they’re probably not. But you’re preparing now, so figure out what you can do to get a step up on the competition. Do you know what your strategy is to win over your competitors’ customers and clients? Do you offer something they don’t that could convince people to make the switch when they’re pickier about where their money is going?
We preach about the BULB all the time. If you’re new to BULB, it’s your Back-up Life Bank. If you get your BULB big enough, you’re totally recession-proof because you’re not banking on your business to pay your bills! Sound pretty great? Well, don’t waste time getting started on building your BULB.
Determine how much you need to live on annually and then multiply that by 25. It’s pretty simple math. And that number shows you exactly how much you need in savings and investments to get by without working — now all you have to do is start saving… and investing.
“Wait what?” you might be thinking. “You want me to invest in the stock market when there’s a recession coming??” Yes, we do. And no, we’re not crazy. The truth is, if you want to recession-proof your business, you need to be investing your income (you know, that stuff you pay yourself each month!) to build up your BULB. Because you can’t build your BULB with savings alone — it would take forever. So instead, we want you to embrace the Law of Compounding Interest.
Because when you invest, you accrue interest. That interest continues to build and build, even after a recession seemingly “takes it all away.” After 2008, we’ve seen a lot of people shy away from the stock market — they’re skittish after losing it all. But the reality is: if they had stayed disciplined and stayed the course, they’d be sitting pretty right now. Unfortunately, they sold when the market tanked and they missed out on the highest return in the stock market’s history — upwards of 10%. Imagine getting 10% back on the money you invested. That’s the fastest way to get to your BULB, and to recession-proof your life and your biz.
We know that recession preparation takes time, (sometimes) it takes money, and you don’t know where to start. But that doesn’t mean you shouldn’t start. We’re calling all you bosses to start looking at your business from the lens of a recession: would you survive? Would you thrive? And what do you need to do today to become recession-proof?
Don’t put it off.
And if you’re listening to this in the future and we’re currently in a recession, please don’t think we’re trying to make you feel bad for not seeing it coming. (Although #toldyaso.) Instead, see this as us giving you the tools to get yourself out of the worst parts of a recession. Start building your BULB. Find ways to innovate. Find ways to make your biz more competitor. And don’t wait ‘til tomorrow to do things you know will protect yourself and your business in the future.
If you want help preparing for a recession and to strengthen your business so you feel secure,
Check out this episode of Worth It. You can also dive deeper into the BULB, why you should be thinking about a recession NOW, and more in the show notes below.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual.
What if you had a clear formula to help you figure out how much to save… while paying down debt and enjoying life? It is possible… when you know your numbers.
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