California CPA August 2023 | Page 18

For potential recession planning , be sure to identify whether there are government aid programs . no result . “ Outbound Engine ” explains that the success rate of selling to an existing customer is about 60 percent to 70 percent , while bringing on a new customer yields only a 5 percent to 20 percent chance of a sale .
businessplanning
BY MICHAEL B . ALLMON , CPA

Recession Protection

Strategies to Protect Small Businesses protecting your or your client ’ s small business against a pending recession might seem like an overwhelming or even impossible task , but it is an important step that every adviser and entrepreneur must think about .

Saving for the future is not just an abstract idea ; it should be a goal that a business strives for throughout the year . By utilizing lean and agile principles , you can ensure that your company is doing everything possible to reduce costs and run at maximum efficiency , affecting more than just your financial statements .
As a business owner with more than a little experience in business efficiencies , here are some tips on how to recession-proof your business .
Create a Solid Plan Every small-business owner knows the importance of keeping costs in line , but few create a plan solely for ensuring that wasteful practices are eliminated . This is the basis of a lean and agile framework : Cutting costs by anticipating your business ’ s needs . It all comes down to solid planning , including options for a business structure to ensure that you ’ re utilizing every possible benefit .
For instance , if you have just started your business and are operating as a sole proprietor , you might want to change to an LLC ( or possibly C or S corporation ) because another form of entity might provide more advantages in the form of legal or tax benefits . This is another important aspect of the lean and agile methodology : Constantly assessing and re-evaluating your processes to ensure that they are as streamlined as possible . Periodically reviewing the form of business can be valuable in the planning process .
It is also important , of course , that your plan includes a budget so you can keep your finances on track . You do not want your expenses to outweigh your income if you want your business to last . Keeping track of your
finances along the way will allow you to pivot in ways that will make your business sustainable , instead of finding out after it is too late that your business is going under . A budget will let you know what is going right — and what is wrong — and can assist with controlling costs to run more efficiently .
“ Exception reporting ” is a helpful management tool that is budget based , where focus is placed only on what is significantly out of line for actuals vs . budget items . With exception reporting the business owner can make corrections when needed , either to the way that the business is operating or to the budgets .
Be Flexible with Your Plan Although creating and using a business plan is essential , you must also be willing to adjust it when needed . It is impossible to plan for every scenario , especially where the economy is concerned , which is why starting with a strong business plan and adjusting as you go is advisable .
For potential recession planning , be sure to identify whether there are government aid programs . Change is the only certainty in any business and this is clearly the case in a recessionary environment . The ability to plan , prepare and adapt to changing situations will be important for the success of the business , as well as its ultimate survival .
Focus on Your Existing Customer Base You might think that to recession-proof your business , you need to attract as many customers as possible ; but doing so could cause you to lose focus and spend more money — all for little to

For potential recession planning , be sure to identify whether there are government aid programs . no result . “ Outbound Engine ” explains that the success rate of selling to an existing customer is about 60 percent to 70 percent , while bringing on a new customer yields only a 5 percent to 20 percent chance of a sale .

As you start thinking about a plan for streamlining your business , you cannot just focus on the operational side of things . You also need to make your existing customers your top priority by knowing exactly how and when to reach them . Create a more personalized experience for them and get feedback since their input can help your business find and eliminate weaknesses because even during times of growth , you ’ ll want to make sure your customer service practices are stellar .
Employee Retention is Crucial As a small-business owner , your employees are just as integral to your success as your
16 CALIFORNIA CPA AUGUST 2023 www . calcpa . org