Recession Proof Your Pole Based Business (Part 1)

Okay, so you can’t actually “recession-proof” your business, but you can make some changes that make it more likely your business will survive a recession.

Before we dive in, what is a recession? Per Investopedia, “[a] recession is a prolonged, broad, and significant downturn in economic activity.” In layman’s terms, a length of time where people are generally spending less money. Sometimes a recession is specific to a country, or it could be global. It could also be more impactful in some areas of a country than others. Not every business or every person will feel a recession the same way.

What Does a Recession Mean For Your Pole Business?

When people have to budget and cut back, the things they consider “frivolous” (not rent, car payments, food, or clothes for their kids) are usually the first to go.

For some of your client base, that may mean cutting out pole class, or reducing the number of classes they attend, therefore reducing the amount they pay to your business.

In addition to your clients paying less, your costs are likely to go up as everyone feels economic hardship. Landlords will find reasons to raise your rent, utility bills will increase, even your insurance may go up.

The best way to recession-proof your business is to always have savings or investments that can be accessed quickly so you can weather a decrease in revenue. 

Aim to have 3-6 months of operating expenses on hand. This means all your operating expenses, including but not limited to:

• Rent
• Employee Wages
• Utilities
• Potential repairs
• Marketing and Sales
• Bank Fees
• Loans.

This may be a pretty large sum of money. It doesn’t have to stay in a checking account, or even a savings account. You can store these funds in Certificates of Deposit (CDs) in a format known as a CD ladder—a collection of CDs with staggered maturation dates. CDs typically have a higher interest rate than a bank account, so your money can be working for you even while you’re saving it.

Work With What You’ve Got

When everyone is raising prices, if you’ve got some buying power, you can negotiate for lower rates. For example, you may be able to save money in the long term by paying some bills in full up front. Ask your insurance agency, phone provider, even your landlord if you can pay ahead for a discounted rate.

If you sell products in your studio, such as grip aides, protein supplements, or clothing, see if suppliers will sell you items in bulk for a discounted rate—this can increase your profitability.

Additionally, if there is a new product on the market that reaches out to you, you can charge them a shelving fee–a fee they pay to have their product in a prominent display at your studio.

Know Your Cash Flow

A Cash Flow Statement is one of several accounting reports that show a company’s financial health. The cash flow statement focuses on the cash going in and out of the business which differs from the Balance Sheet, which shows anticipated money in and money out in addition to *actual* money in and money out.

The cash flow statement will help you see places where you can decrease spending and if you are spending more than you are earning.

Keep Business and Personal Separate

When you’re a small business owner trying to do everything yourself, it’s easy to let personal and business finances blur. This can present a challenge when looking at bookkeeping and trying to figure out the business’s current financial standing.

Using a bookkeeper or bookkeeping software that can provide you with key reports like a Profit & Loss Statement, a Balance Statement, and a Cash Flow Statement is imperative for checking on the financial wellness of your business.

When things get tight, the “easiest” way to cut costs without laying anyone off is to stop paying yourself. This should be a last resort as it will blur the line between business and personal expenses as well as bring the financial stress your business is facing to your personal finances as well.

If you are a studio owner and also teach classes, at least pay yourself for the classes you’re teaching. If you’re in a different type of pole business such as a grip manufacturer or clothing designer, set yourself a minimum salary (that you can live on) and make sure you can still pay yourself.

Part 2 will share even more ideas!