“It’s only when the tide goes out that you discover who’s been swimming naked.” Warren Buffett
In other words? When a recession hits, financial vulnerability shows fast.
In 2020, we learned this the hard way. Businesses that looked rock-solid in February were gone by July. And here’s the truth no one loves to say out loud: the next downturn is coming. Maybe not tomorrow. Maybe not next year. But it’s coming. The best time to prepare was yesterday. The second-best time? Today.
At Estess CPAs, we’ve helped hundreds of business owners in the New Orleans area weather tough economic storms with smart planning, strategic accounting, and a healthy dose of clarity. So let’s break this down: what does real economic downturn preparation look like?
1. Know Your Numbers. Obsessively.
Before you can steer your ship through rough waters, you need a reliable map.
Financial resilience starts with clear, updated financials. You should know:
- Your cash flow (weekly, not just monthly)
- Profit margins by service or product line
- Break-even point
- Burn rate (how long you’d last without a dollar coming in)
If that data isn’t at your fingertips, you’re driving blind. We help our clients organize this through simplified monthly reports, payroll summaries, and real-time QuickBooks insights. It’s not just bookkeeping, it’s survival.
Action Step: Schedule a monthly financial check-in (yes, every month) with your accountant. Or with us. We’d love to help.
2. Trim the Fat Not the Muscle
When downturns loom, many business owners panic and slash costs without strategy. But financial resilience isn’t about austerity. It’s about optimization.
Start by reviewing:
- Subscriptions and tools you no longer use
- Vendors who haven’t offered new value in 6 months
- Redundant roles or services
- Inefficient workflows (hello, manual payroll processing?)
But don’t cut what keeps your business running. Your best employees. Your most profitable services. Your marketing. Your CPA (seriously).
Action Step: Create a “Cut Smart” list with three columns:
Keep | Reassess | Cut then revisit it quarterly.
3. Build a Real Emergency Fund Not a Fantasy One
A shocking 61% of small businesses say they’d struggle to survive a two-month revenue drop. That’s not resilience. That’s gambling.
Aim for 3 to 6 months of operating expenses in reserve. Yes, it takes time. But start today. Build it like a muscle.
Pro Tip: Open a separate bank account and automate transfers every month. Out of sight, out of mind.
4. Diversify Your Revenue Streams
One client of ours had 85% of their revenue tied to one customer. When that customer cut their budget, our client lost nearly everything.
Don’t make that mistake.
Financial resilience means spreading your risk. That might mean:
- Adding a digital product or service
- Expanding into a new market
- Offering recurring billing options (membership models are gold)
Action Step: Identify one new revenue opportunity you can test in Q3.
5. Get Tax Smart Year-Round
Most businesses overpay taxes. Why? Because they wait until March to think about them.
In a downturn, every dollar counts. Tax strategy isn’t a luxury, it’s leverage.
We recommend a mid-year tax planning session. (July is ideal.) This helps you take advantage of deductions, plan for cash flow, and avoid unpleasant surprises come April.
Action Step: Book a mid-year tax checkup. It could save you thousands. We do this for free with all our ongoing clients.
6. Lean Into Professional Support
You can try to DIY your way through a recession. But should you?
Our clients don’t just get bookkeeping they get peace of mind. From streamlined payroll to crystal-clear financials and proactive tax planning, we help them stop reacting and start leading.
If you’re a small or mid-sized business in the greater New Orleans area, we’re here to help. And yes, we actually answer the phone.
Final Thought: Don’t Wait for the Storm
Recession planning isn’t about panic. It’s about poise.
Financial resilience doesn’t mean you never feel pressure. It means you have a plan when it hits. The kind of plan that helps you protect your people, your profit, and your peace of mind.
If you’re not sure where to start, start with a conversation.
📞 Call Estess CPAs today or schedule your free appointment. We’ll help you prepare for the next downturn, one step at a time.
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