A recession is on the horizon. Here’s how you can prepare.

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Experts have spent much of the past year debating when the next recession will hit. At the peak of the trade war with China, three in four economists proclaimed that 2020 would be the year. Fears of an imminent recession have tapered off—a National Association of Business Economics survey now expects one to hit in 2021—but if history is any indicator, an economic slowdown is coming down the pipeline.

While a recession is bad news for any company, small firms are particularly susceptible to downturns and have a higher risk of going under as lending comes to a standstill and consumers forgo products not deemed essential.

But there is an upside: businesses can take actions today that will help recession-proof their company for whenever a slowdown hits. Lana Corsano should know—her business was one of 170,000 that closed in the first two years of the Great Recession. She is determined not to repeat the same mistakes and has had recession proofing in mind since day one of launching her new company Bolt Printing. Below is an excerpt of our conversation about common mistakes business owners make and how to prepare for the future.

What happened with your first business? 

I ended up creating some great relationships in the financial services sector. I started doing small catalogue programs with promotional products with the biggest financial firms. We were low priced and quick. It did well. We were moving into food and doing more promotional types of gifting with food. I made an investment in a facility because I wanted to handle production myself. I started ramping up and hiring but then my largest account, which was Merrill Lynch, got sold to Bank of America and started shedding cash.

I was heavily leveraged and trying to build this at the wrong place and the wrong time. I ended up filing for bankruptcy and going under. When you hire someone, you don’t want to let them go. It’s hard when they didn’t do anything wrong. It was a devastating experience for the employees and devastating for myself. You feel like a failure. What I learned and what I think about everyday when I come into work now is “what do I need to do so I’m never in that position again?”

How do you make sure you’re not in that position? 

Number one is I keep both feet on the ground and am realistic about what I can really do, and I’m not so entrenched to a single customer. I want to keep every customer and do everything I can to take care of them, but if my largest customer decided they don’t want to buy from us for whatever reason, it wouldn’t impact my business at all. Our largest customer isn’t even two percent of our business. Merrill Lynch was a solid 40 percent of the business at my last company.

What advice do you have for other business owners?

Have a diverse clientele, and diverse means not just a customer but a dimension of that customer. You need to be diverse at every stage of the game and not beholden to any one industry. Also not be burdened with debt. My business failed because I wasn’t steering the ship properly. When I hire someone now, I think if I can really afford that, or if I can maintain the equipment that I buy. If I can’t pay cash for something, I’m not ready for it. Be very mindful of where you’re leveraged. It’s easy to get caught up in status or “I have this many employees or all of this equipment.” Try not to fall into that trap. I want to have a viable company that generates profits, keeps employees happy and is sustainable. That’s what’s important to me now. 

How are you recession proofing your business? If you started your company during the last recession, how did that impact your business plan?

Other news I’m reading:

The role of independent publishers: Jeanine Cummins’s novel “American Dirt,” about a bookseller from Mexico who flees to America with her son to evade a cartel, raises questions around whether the publishing industry is “properly equipped to champion the work of diverse voices,” Publisher Weekly writes. (While Cummins did extensive research in Mexico, the author was criticized for cultural appropriation.) The issue also showcases how the publishing industry as a whole has changed as more independent publishing houses and booksellers that showcase diverse writers go under. What role do independent publishers and booksellers play in finding new voices and catapulting them into national discourse? | Join the conversation

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