NEW YORK – Business owners worried about a possible recession are reevaluating budgets and spending so they can keep their staff safely employed. For many higher-ups, they’ve been here before.
Steve Shriver is CEO of the lip care company Eco Lips. During the 2008 recession, Shriver said he had to take himself off the payroll and take on another job to prevent layoffs, and he cut as few costs as possible. He currently has a staff of 80 employees.
Now, with another recession on the horizon, Shriver said he’ll be happy if the company can “stay flat,” or not see any growth or shrinkage with its revenue. He also said that to keep his staff employed, the company will freeze additional hiring and step up its planning.
Shriver declined to disclose the company’s annual sales or how it’s grown since 2008.
“It’s super-important that on a daily basis, we are auditing our expenses to reduce expenses outside of labor costs,” Shriver said. “It’s monitoring the cost of goods, making sure that we’re charging enough for products, having enough gross margin to be able to afford to keep our staff.”
80% of workers scared of losing jobs during a recession
According to a study from Insight Global, 80% of workers are worried that their job is not recession-proof. And with inflation at an all-time high, 56% of workers don’t feel prepared financially for a recession.
Bert Bean is the CEO of Insight Global, a staffing company that helps job seekers look for careers in health care, finance, IT and government. He said that during the mass layoffs amid the COVID-19 pandemic, workers overall lost trust and faith in their employers. As a CEO himself, he said layoffs shouldn’t be the first thing an employer thinks about when it comes to saving a company during a recession.
“You can decide to cut back costs or you can decide to actually grow through the recession and take more of an offensive measure,” he said, adding that companies should be transparent with employees.
Businesses brace for slower consumer spending
Taufeek Shah is CEO of minority-owned Lola’s Fine Hot Sauce. He said his biggest fear with a recession is the slow economic growth with consumer spending and how it could affect the cost of its goods.
“We’re a small business, and we’re always trying our best to stay ahead,” Shah said. “We’re going to stick to our guns, but my biggest fear is if consumer spending goes down to next to nothing.”
Shah said that because Lola’s isn’t a multimillion-dollar company, it’s able to pivot in a difficult time faster, because it knows what areas of the business it can focus on while maintaining product quality and customer experience.
Harji Singh, a co-founder of the Delta 8 cannabis beverage LOKI, said he shares Shah’s thinking, adding that the alcohol industry did very well during the 2008 recession.
Singh, who also owns a creative agency, said the company is trying to spend as wisely as possible, cutting back on events and influencer marketing that other beverage companies might be doing. Because the company is only 50 people with a core team of eight, Singh said, it is trying to leverage resources the company already has to keep staff where they are now.
“We’ve seen what happened in the recession in 2008, so we’re trying to position ourselves to spend wisely and leverage all resources we already have to scale the brand,” Singh said. “Find out where the majority of your revenue is coming from and double down on it to build the best relationship you can with that market.”
Small business owners are worried about the supply chain again
But some companies are still recovering from the pandemic and supply chain interruptions that followed.
Shah said COVID-19 was a double-edged sword because when the pandemic hit, panic buying helped Lola’s products sell, but once that slowed, supply chain bottlenecks started affecting production.
“I would almost tell you right now, supply chains are worse now than during COVID,” he said. “Fortunately for us, we have contracts for any time we get a product that does not meet the quality standard.”
Some businesses said they aren’t too worried about staffing during a recession.
Greg Davies is CEO of Full Measure Education, a startup that works exclusively with higher education institutions to make student interaction accessible. When learning went remote, Full Measure helped universities create virtual campus tours and helped students register for orientation and even make a deposit for on-campus living.
“Traditionally recessions are good for higher (education),” Davies said. “So far, it looks like our market isn’t really impacted by this, but we’re looking at it on a monthly basis for how we need to reconsider and what we should change accordingly.”
Entrepreneurs try to keep recession and inflation in perspective
Davies said business owners should remember that economic events like a recession don’t last forever, and they should keep employees primed and ready to help in case the business is affected.
Singh said business owners should nurture relationships with employees, including vendor relationships, for when things get crazy.
“When things do hit the fan, it comes down to a personal connection at that point,” Singh said. “People would rather keep someone they personally like or a company they personally like verses just another vendor or just another product on our shelf.”
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