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The time to recession-proof your business is before the economy starts to downturn. Later may be too late to turn the ship around. Careful planning and taking specific steps now can help you prepare your small business for future downturns and marketplace changes.

Get a Handle on Your Cash Flow

Many businesses fail because of problems with cash flow. It is important to know your numbers as they stand at present and create a profit plan for the future. Keep an eye on what happens to your cash flow in different situations. Build good habits. Ensure your customers or clients pay you on time. Create a system to keep accounts receivable under control. Build a cash cushion, if possible.

Develop Multiple Revenue Streams

Create various ways to bring in revenue with a wide range of price points. This can help you maintain your business income, regardless of what the economy is doing. The idea is not to be caught with all your eggs in one basket. Having a variety of revenue streams can help your business remain flexible and capable of persevering in a recession.

Budget Spending According to Revenue

As a financial planning strategy, instead of creating a specific amount in the budget for marketing and other variable expenses, establish those budget items as percentages of revenue. This method will automatically boost marketing when sales increase and help you control spending if they decline. Unlike fixed expenses such as building rent, variable costs can be tied to revenue.

Arrange for Financing Before You Need It

Consider opening a line of credit to use as a cash cushion for the business. Only use it when you really need it to keep the cost minimum. Your business will only incur interest and fees on the amount you borrow. It is better to find financing before you are in a cash crunch. Lenders are likely to tighten standards once a recession begins.

Build Existing Client Relationships

Instead of spending a lot of money to attract new clients, invest in relationships with the ones you have. Give your current customers the best experience and results. They will want to continue doing business with you and will serve as a source of new clients. Word of mouth is a practical, low-cost method of advertising.

Be Prepared to Diversify

Prepare to take your business in a different direction if a major change in the economy occurs. You may need to pivot to a similar product or service in greater demand at a different time. Think of “what if” scenarios and new lines of business you could go into if the economic environment changes in a recession.

Position your business for success before the economy starts to slow down. Make any adjustments necessary to leverage opportunities that come with a recession. Our knowledgeable agent can help you ensure you have the business insurance coverage you need to protect your small business before and during a recession.

Employment Practices Liability Insurance or “EPLI” is a form of business insurance specifically to protect against employment-related lawsuits. While the suit may not be accurate, once filed, you will need to defend against the case, which can prove to be very expensive without this type of insurance. The right Employment Practices Liability Insurance can help you get through challenging legal situations without sustaining severe financial losses. There are four things to know about this type of insurance:

This insurance helps you pay to defend against employment-related claims and pay any damages awarded.

This insurance can be a lifesaver if you need to defend against an employment-related claim and pay damages awarded up to the policy limits. Employment lawsuits include wrongful terminations, civil rights violations, workplace harassment, retaliation, sexual harassment, age discrimination, and claims.

Employment-related claims are at an all-time high.

If you think your company will never be named in a lawsuit, you should be aware that few companies avoid this situation. In the last two decades, employee lawsuits have increased by 400%. Over time, the more your company grows and the longer you operate, the higher the risk. Over 75,000 discrimination lawsuits were filed in recent years, with almost 24,000 for race-related claims and over 23,000 for sex discrimination. These policies do not cover illegal employees.

Your employees must be legal hires.

If you have any person in your workforce hired illegally, your EPLI does not cover you. To avoid this risk, ensure every employee in your business was legally hired. If such an employee files a lawsuit after an injury and is successful, you will be forced to pay a settlement out of pocket.

These policies do not cover contractors or employees who are working overseas.

Your EPLI insurance does not cover any employees or contractors who work for you overseas. You will need to purchase a separate policy in the country in which they are employed.
With 61 percent of employees in the USA reporting that they have been the victim of or witnessed discrimination for age, race, religion, or gender, it is very likely that you will be served with a lawsuit with time. When that happens, it is reassuring to know you are covered. You can’t then purchase insurance and expect the insurer to pay for your defense – you need Employment Practices Liability Insurance before that eventuality, which is inevitable for most businesses.

The Costs to Your Business

Defending against an employee-related claim can cost in the range of $200,000 should the case not be settled before trial. Few businesses can afford these financial losses, and EPLI insurance provides you with peace of mind. When a lawsuit is successful and you are ordered to pay damages, it can be a financial disaster. Rather than take risks, put one of these policies in place to add a layer of protection that every employer needs in this litigious culture. Our local business insurance agents can help you purchase a policy that suits your enterprise, and we seek the best coverage at the most affordable rates.

The craft beer industry has been built by passionate, talented brewers, who have invested their time and energy to create new flavors and brewing techniques. As the brewery grows, business risks arise that should be addressed before something goes wrong. These tips cover some of the basics of brewery risk mitigation.

Proper Spill and Broken Glass Cleanup Processes

A taproom is a popular and convivial place to visit. Many of these facilities have a smooth cement floor. Beers and other drinks are often spilled by customers or employees, posing a risk of a slip and fall accident. After a spill, ensure staff fully remove glass and liquid, and place signs to alert customers of a wet floor.

The CDC reports that one out of every five falls causes an injury, such as broken bones, head and brain injuries, and spinal cord injuries. Brewery taprooms must maintain reasonably safe premises, and if they fail to do so, can be held liable in a claim or lawsuit. Ensure your business insurance coverage has policy limits that reflect the risks associated with a slip and fall.

Do Not Over-Serve

It may be difficult to watch over every customer, particularly on a busy weekend night, but customers that are obviously intoxicated can put your enterprise at risk. A drunk patron could become aggressive and assault another patron, or leave the business drunk, drive a vehicle, and cause a crash. Many states have “dram shop” laws in place that allow victims of drunk driving accidents to sue a vendor who served alcohol to a visibly intoxicated customer. Slow serving a patron who appears to be consuming drinks too rapidly. It may not be pleasant, but to protect your business, it is advised that you refuse service to a person who enters your facility obviously intoxicated.

Employ the Correct Tank and Line Cleaning Processes

Brewing beer is an art and a science. The brewing process requires keeping all brewing equipment clean, sanitized, and thoroughly rinsed to ensure no cleaning product residues remain. Draft beer lines must be cleaned properly to remove any bacteria, yeast, or mold that could be in the beer served to a customer, who could become ill. Product recalls and sick customers can lead to claims against your brewery.

Protect Your Brewery with Patents, Trademarks, Trade Secret Protections, and Contracts

Correctly registering your trademarks, registering patents, and ensuring every person involved in the brewing process signs contracts that protect your intellectual property are critical aspects of doing business. If another person steals your recipe or brewing techniques, the cost of litigation can be astronomical.

The Right Business Insurances

Breweries should have extensive business insurance policies to protect against claims, lawsuits, alcohol liability, advertising and slander claims, as well as insurances to protect against spoilage, equipment breakdown, and business interruption, along with workers compensation and other necessary policies. To put the most comprehensive brewery insurances in place, speak with one of our local insurance agents.