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Five ways to recession-proof your small business

By Dan Reed, SCORE Maine

Talk of a potential recession can be unsettling, especially if you run a small business. Here are five ways to strengthen your position before the next downturn.

Stay flexible

Dan Reed of SCORE
File photo / Tim Greenway
Dan Reed of SCORE

Customer behavior changes when the economy slows. People spend less on wants and focus more on needs. As a business owner, it’s important to recognize that shift and adapt accordingly.

In Maine and across the country, many health care providers, large systems and small practices alike, have shifted toward direct primary care subscription models.

By removing insurance middlemen and focusing on direct relationships with patients, they’ve gained the flexibility to control costs, improve patient experiences and maintain steady revenue even when insurance reimbursements or patient volumes fluctuate.

The same principle applies to any business: flexibility comes from staying close to your customers and understanding what they truly value. The ability to adjust your model, from pricing to delivery and structure, can help you maintain stability where others might struggle.

Put customers first

In lean times, there are fewer customers to go around. That makes each relationship more valuable. Nurture your current customers by focusing on exceptional service and consistent communication.

Some Maine businesses keep their customer base strong in the off-season by creating community events. One local brewer’s community pizza nights are a great example. By offering weekly gatherings that also support local nonprofits, they deepen loyalty and keep customers engaged even during slower seasons.

Small businesses don’t need to copy this exact model, but the principle stands: deepen relationships, give people a reason to return and connect your work to the community you serve.

Know your numbers

A strong financial foundation is critical in a recession. Start by reviewing your budget closely. Identify areas where expenses can be trimmed, even in small ways. Monitor cash flow carefully and consider steps like shortening the time it takes to get paid, reducing outstanding debt or setting aside reserves.

Ideally, aim for a cushion that covers three to six months of operating costs. Access to capital is also worth planning ahead. Even if you don’t need financing today, having a line of credit or loan approval in place can provide peace of mind and flexibility later when things get tight.

Assess your team’s engagement

Your team is central to how well you navigate tough times. Start by reviewing your current roles and responsibilities.

Ask yourself: are the right people in the right seats? Are there processes that could be streamlined, tasks that could be automated or duties that could be outsourced? Are we fully using the talents of our current team members?

Beyond structure and efficiency, consider how ownership affects commitment and leadership longevity.

Due to upcoming staggered retirements in its leadership structure, one Maine advertising agency recently transitioned to 100% employee ownership through an Employee Stock Ownership Plan.

Whether or not an ESOP is right for your business, the idea holds true that when employees feel true ownership, they become partners in stability and growth.

Building that culture of shared responsibility can make the difference between surviving a downturn and thriving through one.

Be open to experimentation

A downturn does not have to mean standing still. In fact, it can be the right moment to try something new. When competitors are pulling back, new space often opens up in the market. 

Use this time to test fresh ideas, explore different sales channels or refine your business model. Experimentation doesn’t have to be risky or expensive, it can be as simple as piloting a new service, testing an online sales option or trying a different pricing structure. The point is to keep moving forward while others pause.

Building resilience and flexibility

No business owner can predict exactly how the economy will unfold, but you can prepare. 

By putting customers first, maintaining financial discipline, leveraging your team’s skills and experimenting with new approaches, you build resilience and flexibility into your business.

These steps don’t just protect you during a downturn, they strengthen your business for the long run. Recession-proofing is not about reacting to fear, but about building a business that can thrive in any season.
 

About the author

Dan Reed, a Mainebiz 40 Under 40 honoree in 2024, is the marketing and program manager for SCORE Maine and can be reached at  dan.reed@scorevolunteer.org. He is the founder and president of Dan Reed Marketing in Bath. 

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