How to manage cash and stay out of debt running a business in a recession

Melissa Bradley has helped guide thousands of business founders through challenges.

With a 98% success rate during Covid among over 3,000 Black and brown entrepreneurs with whom her organization has partnered, Bradley says consistent planning and "always expecting the worst" is in a minority business owner's DNA. "Nothing is a guarantee," she said. It's more important than ever, she says, to understand drivers of growth, and dig into the details from all the business data at your disposal, showing what customers like and don't like, where they search and shop, and when and how often they come back.

She provided the example of a spirits business that experienced a big increase in the cost of glass that resulted in the need to reevaluate pricing. All businesses need to be able to at least cover costs without dipping into the owner's pocket to pay, and that's become more challenging amid inflation.Bradley stressed that a business owner should not dip into your person savings, or "borrow against your house," to keep a business going.

She advises moving more costs to the fixed cost bucket, "so you can become laser focused on it, so you don't have a deficit at the end," she said.New business formation in recent years has been at record levels and when many businesses are first starting out they rely more heavily on consultants. Bradley says now is the time to reevaluate a reliance on multiple consultants.

It is critical to keep personal and business accounts separate, but just as important to know you will at some point need more money for your business and you should be paying yourself as you go — not necessarily a lot, but with consistency.

Strategic reassessment of your business. Based on the strategy, you define your tactical readaptation decisions in a recessionary scenario.

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