Floral financial expert Derrick P. Myers, CPA, CFP, PFCI, shares several strategies to prepare your business to weather a downturn in the July/August issue of Floral Management.
Is a recession coming? Soaring inflation, rising interest rates, and the stock market’s worst start in 50 years last week have many economists predicting ‘yes.’ Floral financial expert Derrick P. Myers, CPA, CFP, PFCI, says data from clients shows floral sales slowed in the first half of the year compared to 2021, corroborating the possibility. In the July/August issue of Floral Management, he shares several strategies to prepare your business to weather a downturn.
Nurture Business Relationships
Staying in touch with your network — including customers, suppliers, bankers, financial experts, peers, trade groups, and local service organizations — could pay off in many ways. “It could be as simple as a loyal customer who buys from you even in bad financial times,” Myers says. “Or perhaps a better relationship with a wholesaler could get you first access to a hard-to-find product.” You never know who might help you down the road, but “the more resources you have at your disposal, the stronger you are.”
Control Your Costs
This is one of the most critical aspects of surviving a recession. Myers recommends listing all expenses and breaking them down into two categories: fixed and variable. Fixed expenses are those that do not change with an increase or decrease in sales, such as rent, utilities, insurance, vehicle leases, and note payments. Variable costs include things such as cost of goods sold, payroll, advertising, travel, and dues. “Once you separate them, you need to focus on those expenses you can control in the short term,” he says.
Don’t Stop Marketing
It’s a natural gut instinct to stop spending on marketing when sales start to drop. However, research shows that when brands increase their marketing during an economic downtown, they come out the other side stronger than their competitors who discontinue marketing. “If your cash flow becomes too tight to continue at current marketing levels, don’t stop marketing,” Myers says. “Instead, throttle it back and continue at a lower spend. Then ramp promotion back up as soon as sales start to strengthen.”
Optimize Your Inventory
Supply chain woes have made getting goods increasingly difficult, and they will likely continue for a while. “If we enter a recession, make sure that you balance ‘stocking up’ with being frugal,” Myers warns. Only buy what you know you will sell and be wary of adding new lines.
For more tips, read “Recession-Proof Your Business Now” in the latest issue of Floral Management.
Katie Vincent is a contributing editor for the Society of American Florists.
