A guide to help Recession Proof Your Woodworking Business
A recession is generally characterized as a period of time when business activity significantly contracts and the general economy is contracting. This can lead to falling levels of investment, consumption, trade, and hiring. A recession can have a significant impact on almost every industry and business.
Even if you’re not directly affected by a recession, it’s usually still wise to look for ways to protect your business from any potential negative impacts.
There are many different measures that businesses take during a recession so that they don’t lose money or have their growth stunted. These are known as ‘recession-proofing measures’ because they help protect your business from the effects of a recession.
Read on to learn more about some useful tips on how to recession-proof your wood business and thrive no matter what the economy throws at you.
1. Assess and improve processes
A recession can put a strain on cash flow, so it’s important to optimize your existing processes to reduce costs and make the most of your existing assets. Consider how your business is currently operating.
Where could you make improvements to save time or money? What assets do you have that you could use more efficiently? What about your customer service or management practices?
If you manufacture products, assess process times by breaking down each element and scrutinize how to shave, even a few minutes, of tasks and parts of the system.
Remove clutter and keep your workshop, warehouse and working spaces tidy and free from obstructions. Even small adjustments to help flow around these spaces can help.
Organise your stock, count label and log everything you have, even offcuts of timber. Look to consolidate items and be creative in turning old stock or offcuts into cash. Consider selling as random wood packs - hobbyists, woodwork enthusiasts and woodturners will happily buy random wood packs.
Assess if waste can be reused. If you don't already recycle, resell, or repurpose your waste, like wood shavings, sawdust, and offcuts it is vital to do this now.
These are just a few examples of areas that you could improve to help reduce costs and protect your profits. Successfully recession-proofing your business also means making sure that your business also has some built-in flexibility to adapt to changing circumstances.
Nobody can ever predict the future, but it’s important to keep an eye on economic indicators and make adjustments as necessary. For example, you should definitely be keeping a close eye on interest rates and supply / demand levels in your local or industry-specific markets. These will give you a good idea of the direction in which the economy is heading.
2. Limit Marketing Investments
During a recession, the best way to save money and protect your cash flow is to reduce the amount of money being spent on marketing. In other words, cut back on your advertising spending.
This is both a good way to protect your business from the effects of a recession, as well as a good way to improve cash flow and protect your bottom line. Depending on the type of product or service that you offer, you may be able to defer some marketing investments until the recession ends.
For example, if you sell products that you know will be in lower demand during these times, you may be able to defer spending on new advertising campaigns until demand for these products picks back up again. You can then use your advertising budget to focus on the products and services that are most needed by your buyers.
This can also, in turn, streamline your production and reduce costs especially if you have a diverse product offering. All of this can be a good way to save cash flow during a recession.
Please note that stopping your marketing and promotion, altogether, can be counter-intuitive. An economic downturn equals a reduction in opportunities so you still need to be the one that people turn to.
It is just a case of assessing your marketing strategy and focusing on what works. Consider organic SEO for your website, free promotion and lead generation website sites like Wooduchoose.com can help with this. We also offer digital services, specifically for our industry, and can conduct a free website appraisal to give you insights into search engine optimization and how to be better found online.
3. Invest in Technology
Technology can be an important part of a company’s infrastructure, especially if your business is heavily reliant on digital technologies. However, during a recession, it’s a good idea to invest in technology in order to improve efficiency and reduce costs.
It’s a great way to protect your business from the effects of a recession. Find ways to increase efficiency and reduce costs throughout your organization, and look for ways to invest in new technologies that can help your company run more smoothly.
For example, consider investing in digital workflows that can help your team work more efficiently, saving you time and money.
Technology can be an excellent way to protect your business from the effects of a recession. We are experts in this space and offer a free, 15-30min consultation to provide more ideas and options specifically for your needs.
4. Diversification is key
A recession can be an excellent opportunity to diversify your business and find new areas of growth. You can look for ways to expand into new markets, find new customers, and develop new products or services. It’s a great way to protect your business from the effects of a recession.
Diversification can help you reduce your reliance on any one particular industry. This can be a great way to protect your business from the effects of a recession.
5. Scrutinize finances
Even during the best economic times, it’s a good idea to keep a close eye on your financial situation. During a recession, it’s essential to scrutinize your finances closely.
There are a few ways to do this. For example, you should be always monitoring your cash flow. You should also be tracking your expenses and analysing your debt to make sure that you’re in a good financial position.
It’s a good idea to set certain triggers and markers so that you know when to take action. For example, if your cash flow dips below a certain amount, take action immediately.
Look at subscriptions and regular fees/costs - are you getting the best value from all of these?
6. Make the Most of Existing Assets
During a recession, it’s a good idea to be as creative as possible in order to make the most of your existing assets. This can include finding ways to reduce your operating expenses, such as cutting back on unnecessary expenses or finding ways to increase efficiency.
It can also include finding ways to increase revenue without adding significant expenses. As mentioned above, we can help here too. Our timber industry marketplace gets you in front of the right audience. Sign up to get started https://www.trade.wooduchoose.com/
A recession can be an excellent opportunity to implement some positive changes to your business. It can be a good way to improve your bottom line and protect your business from the effects of a recession.
To do this, you’ll need to keep a close eye on the economic indicators, and you should implement some of these tips to help you weather the storm. Now that you know more about how to recession-proof your wood business, you can make sure that your business is prepared for whatever the economy might throw at you.
We used to own and run a woodworking business and we've been through a few of these downturns and learned so much, mostly by not taking action! We would be happy to help in any way we can. Please take up our free consultation offer, it's an online meeting/call that could be the difference between thriving and not surviving.
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