All the rumors about the coming recession may have you worried about your small business.
You’re not alone: 74% of American small business owners are worried about a recession, according to a survey by Empower Retirement and Personal Capital. In addition, 85% are concerned about inflation and 56% are already seeing their standard of living decline, according to The Harris Poll’s survey of 2,000 American adults conducted in April of this year.
The odds of a recession vary, depending on who you ask: Goldman Sachs puts it at a 30% chance next year, and UBS stands by its “no recession” baseline. For their part, Ark Invest CEO Cathie Wood and Wharton finance professor Jeremy Siegel believe the US is already in an economic recession.
So what are some ways you should be rethinking your strategy to survive “Recession 2022”? Here are some things every salon/barbershop/spa/salon suites owner and hairstylist, colorist, nail tech, esthetician, barber, makeup artist, braider, and massage therapist should be thinking about:
5 Ways to Prepare for Recession 2023
1. It goes without saying: Cut expenses
Start looking at where you can cut back and think about what your best and worst case budget would be. Can you save on products? Can you pre-pay in bulk? Will your landlord provide a temporary discount on CAM charges? Can you drop your ShearShare rate to generate more bookings? You have to think about as many ‘what if’ scenarios as possible and act on them now.
2. Increase your emergency fund to 6 months
Most advisors recommend having enough savings to cover three to six months of business expenses. Maybe now is the time to add a listing to your ShearShare profile if you’re a host, or take note of the cheaper day rates near you if you’re a stylist so that you can stack that business savings account. Of course it may be worth reconsidering this recommendation based on your specific circumstances and how your individual beauty business operates.
3. Monetize your knowledge
“You is kind, you is smart, you is important.” Sometimes as beauty and barbering professionals, we undermine our own expertise and don’t realize our knowledge may be valuable to others. Keep in mind that someone is aspiring to be where you are now, which means you have knowledge that could potentially be monetized. Whether you’re a social media genius, color creative powerhouse, or a retail whiz, think about how to deliver the knowledge to people who need it. Some ideas include offering consulting services. According to Indeed, the average base salary of a freelance consultant in the U.S. is $75.45 per hour. Other ways to monetize your knowledge include providing one-to-one coaching for other pros who want to develop the skills you have or creating an on-demand course your fellow peers can buy and learn from.
4. Pay off debts slowly but surely
If you have any high-interest debt, start focusing on paying it off . . . period. You don’t want a repeat of COVID-19 when we were forced to stay home and not produce income to pay our bills. Not only will it help you be prepared if Recession 2022 hits hard, but interest rates are also expected to rise in response to Federal Reserve hikes. And that’s not good when your credit card debt has racked up four or five digits.
5. Keep smart investments
Recent market rollercoasters may make you consider cutting your SEP of offloading real estate. However, it’s important to keep your emotions in check, ride out the wave as best you can, and remember that you’re in this for the long haul. Every time the market crashes, it really means that things are on sale and will inevitably bounce back up! Economic growth is the long-term trend. 😉
“You should never make an investment decision when you are panicking or when you are very scared.”
So yes, we are once again making adjustments to our small businesses. And yes, we will get through this storm as well. After navigating the pandemic and dealing with rising inflation, we’re now thinking about how to weather a possible recession.
What other tips do you have to share with the ShearShare community about surviving Recession 2022? Leave a comment below.