Here are a few tips to prepare for financial uncertainty this year.

There has been a lot of discussion about our current financial climate and the possibility of a deepening recession next year. Given the Federal Reserve’s decision to continue to raise interest rates in response to increasing inflation, it is likely that we will experience more financial challenges, although there is certainly significant debate about the extent of that recession. Regardless, every small business owner should be prepared for challenging financial times, particularly now. Here are a few strategies from our friends at Forbes.

Keep tabs on your cash flow. It is possible that your expenses will exceed your revenue, so careful planning of your cash flow will be critical. Use can use a simple spreadsheet or a more sophisticated tool on your accounting software.

Reduce expenses. Review your expenses to determine whether there are expenses that can be eliminated or put off.

Focus on your profit margins. Identify the products/services that provide you the highest profit margins, and make adjustments to your business model if needed in order to protect the areas of your business that have the strongest profit margins.

Be wise about existing and new debts. It might make sense to delay paying off your debts in order to have enough cash on hand. And it might make sense to wisely take on new debt such as a line of credit if needed. But be sure to evaluate the total cost of taking on that new debt and whether it will be worth it in the end.

Save! Think about using your end-of-year profits to build a rainy day fund rather than reinvesting them in the business.

Monitor your receivables. Given that your customers might also be struggling and might pay you more slowly, you might need to be on top of your receivables more now. You might consider flexible payment options, but you also should evaluate which customers will be best for you to work with over the long-term given their payment history.

Use data to make your decisions. Look at your numbers and get wise counsel when you make your decisions, given that a wrong decision might potentially be disastrous for your business.

How else are you managing these difficult financial times?

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