Request a call Login

  • Over the past two years, small business owners have faced many obstacles. The COVID-19 pandemic forced businesses to shut down, pushing businesses to operate differently while facing labor shortages, a supply chain crisis, and increasing costs caused by inflation. This has left business owners questioning whether or not a recession will happen in the coming months. A recession is a significant, widespread, and prolonged downturn in economic activity. In a recent survey, 70% of small business owners dictated that they expect a recession within the next six months; however, significantly fewer respondents feel prepared to cope with it. The question of a recession is no longer if, but when.

    As a business owner, it’s crucial to consider what you can do to survive this recession. While most business owners have reported cutting costs where they can, others are contemplating changes that could impact the jobs market. In addition, business owners have considered decreasing their current insurance coverage to reduce operational expenses. So, since there is now a 98% chance of a global recession within the next 12 months, what steps will you take to ensure your business is prepared?

    Continue reading to learn how to prepare for a recession before it’s too late.

    Steps You Should Take As A Small Business Owner

    With the prediction of a recession coming in the next year, you must take every step possible to ensure the effects of a recession don’t blindside your business. The following are ways in which a recession could affect your business if you don’t take a proactive approach now:

    • Plummeting sales
    • Credit impairment
    • Bankruptcy
    • Employee layoffs
    • Benefits reductions
    • Decrease in asset prices

    However, rest assured there are approaches you can take to safeguard your business.

    Consider raising prices

    Whether you’re a business that sells tangible goods or even intangible services, you can certainly raise the prices of your product or service. Businesses are implementing this tactic to compensate for the lost revenue they see instead of laying off employees.

    Temporarily cut wages

    Employees are your biggest asset so losing them during a recession is never a good idea. While some businesses may have to resort to laying off their employees, try reducing your employees’ salaries first. This is an excellent approach to reducing the number of employees you lay off.

    Cut back on spending 

    You may think this is an obvious step in fighting the effects of a recession. However, many business owners don’t fully understand how to do that. As soon as you are made aware of a possible recession, it’s critical that you immediately review all expenditures and determine ways to reduce or eliminate unnecessary costs. The following are ways to cut back on spending:

    • Eliminate discretionary spending
    • Buy more strategically 
    • Stop paying for equipment you don’t need
    • Renegotiate your lease or move elsewhere
    • Eliminate unnecessary perks
    • Cut business travel 
    • Cut back on insurance expenses where applicable
    • Look for new vendors
    • Shop around for more competitive rates
    • Join a coworking space
    • Outsource business task

    While this is essential amidst a recession, cutting costs shouldn’t just be a periodic exercise to improve your bottom line. Throughout the year, consider where you could be cutting expenses – with or without a recession, the opportunity to improve one’s bottom line is always welcomed.

    Outsource Your HR Functions

    At GMS, we understand the word recession is the last thing you want to hear. When you partner with GMS, you gain experts in all areas of your business, including HR, payroll, benefits, and risk management, to ensure your business doesn’t go awry during a recession. Our competitive rates, partnered with our streamlined approach, can save your business thousands. Let’s combat this recession together. Contact us today.

  • Since U.S. businesses are still having a difficult time filling open positions with quality talent, employers anticipate pay to go up in 2023. According to the Bureau of Labor Statistics (BLS), there were more than 11 million job openings at the end of May 2022. In addition, approximately four million workers quit each month. The question employers keep asking themselves is, why are so many employees leaving their jobs?

    Americans are quitting their jobs for multiple reasons, including: 

    • Seeking higher pay
    • Remote work is appealing to individuals 
    • Rejecting return to office policies 
    • Burnt out

    The Response From Employers 

    With a labor market that has more open jobs than individuals to fill them, businesses have been forced to stay current with what’s happening in the employee marketplace and how that affects pay. 96% of companies have begun increasing salary budgets. A study by WTW showed that the average salary increase hit 4.9% in 2022 compared to a four percent increase back in 2021. However, it is more important than ever for businesses to have a strategic plan while increasing salaries.

    Additional insights from the WTW survey show: 

    • 46% of employers cited employees have higher expectations for wage increases because of inflation
    • Two in three employers are budgeting for higher pay raises this year
    • 90% of employers are having trouble attracting talent
    • 75% of employers said the tight labor market is the main reason for increasing their salary budgets

    Will These Efforts Be Enough? 

    The question remains whether pay increases will be enough for workers as they continue to battle rising prices. Despite a 4.1% salary budget increase, businesses will still fall behind inflation with these pay raises. In turn, workers’ take-home pay is weakened, reducing their buying power. Even though workers continue to hold the upper hand in the job market, many still fear a recession is imminent, and they question the economy’s state.

    GMS Can Take Pressure Off Your Shoulders

    Although there is no way to predict the future and your employees’ response, GMS can certainly relieve you of some of the pressure you may be feeling. Our team of experts works diligently with your team to attract and retain quality employees. Our HR experts can help business owners conduct a salary analysis to determine the correct salary to offer employees based on the market conditions. No need to worry during these unprecedented times; allow GMS to take on the administrative burdens of running your business. Contact us today.

  • Hiring talented, committed employees is a crucial part of running any business. Identifying those key employees is especially important when you need to lean on those individuals during a recession. Even during tough times, you may find yourself in a position where you need to grow your team. Between financial concerns and a growing pool of potential candidates, it’s important to weigh a few factors to ensure you make the right hiring decision for your business.

    An employer finding the right new employee during a recession.

    Scrutinize Each Open Position

    In a recession, you may not have quite as much flexibility to add to your payroll. This impact on your bottom line means that it’s additionally important to review your hiring needs and estimate timelines and costs. If you’re looking to add employees, you’ll need to examine short- and long-term needs and see how adding people will impact your business. 

    To start, analyze every opening. Is this a role that’s absolutely essential or will help generate business, even during a recession? You’ll want to determine the importance of each potential position and fill the most crucial roles first if you need to be picky. You’ll also need to try and forecast how the recession will affect your business – if there’s a fair chance you’ll need to furlough or let people go in the near future, you should hold off on adding employees. You can also get creative with certain openings. Freelance or temp workers are a short-term solution that can help when money is tight.

    Evaluate Your Current Staff

    If you’re looking to fill certain positions, you should also look inward for hiring opportunities. There may be a talented employee ready to make the jump and take on more responsibilities instead of having to hire another person. This scenario is hugely beneficial during a recession for a couple of reasons. 

    First, internal hires tend to cost less than external ones. Not only can promoting from within take less time and effort than a lengthy interview process, the starting salary for external hires is roughly 18 to 20 percent higher on average than internal candidates. Second, you already know how an internal candidate fits into your company culture. This familiarity is extremely important, especially when you consider that external hires are 61 percent more likely to be fired from new positions than people who are promoted from within.

    There’s also a chance that after evaluation, you may realize that you don’t need more employees – or that you may need to fill more holes than you expected. It’s good to take a critical look at your organizational structure and current staff. To do this, the Society for Human Resource Management (SHRM) suggests asking yourself a few questions:

    • Do we have the right leaders, and are they in the right positions? 
    • Is our staff aligned to meet organizational goals?
    • What opportunities do we have to improve or grow the business? 
    • How can we best structure our work groups to achieve optimal results? 
    • How can we reduce costs without compromising the quality of our product or service? 
    • Can we automate or outsource any functions or processes to drive internal efficiency?

    The answers to these questions can help inform key decisions, which is especially important during a recession. An in-depth review of your team will help you identify ways to make your workforce more efficient or gaps that can be filled by existing employees. You may also learn that you need to fill a different role than originally planned. Regardless, looking inward can help you get the team you need in place so that you can stay strong during a recession.

    Market Your Business, Not Just the Job Opening

    A recession is an unsettling time for both employers and employees. Seeing friends, family, and coworkers get furloughed or laid off can make a once promising job candidate less likely to look for a new job. There are also a few other reasons why potential prospects would refrain from job hunting:

    When talented prospects are hesitant to move, it’s time to approach recruiting with a marketing mindset. Make it clear to candidates exactly why your business is a great landing spot. If you know that your business is financially secure, make it clear to concerned candidates that the new position is a safe landing spot for talented, innovative people. 

    Showcase the aspects of your business that make your brand an attractive one to work for, whether that’s an attractive benefits plan, quality of life perks, or any other differentiators. It’s also important to listen to desirable candidates about what they want in a job. These details can help you understand what it takes to attract top talents in trying times and adjust your recruiting approach accordingly.

    Be Selective, But Don’t Drag Your Feet

    With layoffs and furloughs, the hiring pool is larger than usual during a recession. These factors may give you a wider group of potential prospects, it can also mean that there are more unqualified people eyeing your positions. As such, it’s crucial that you work to find the right candidate for the job. If you have specific requirements, make them clearly known on job descriptions to narrow your candidate pool to the proper people. Don’t be afraid to be picky – hiring a new employee is a major investment, so finding the best fit is key.

    Once you identify someone as a top target, it’s time to act. You’re not the only company looking to hire in a recession, so top talent can disappear quickly once other companies recognize their worth. If you feel great about a candidate after going through the interview process and the background check comes back clean, don’t hesitate to make an offer before another business does.

    Get the Right Team in Place for Your Business

    A recession is a challenge for just about every business, but having the right people in the right seats can help keep your business stable during difficult financial times. Do you need help recruiting the right employees for your business? Contact GMS today to talk to one of our experts about employee recruiting services and employee benefits administration to attract top talent to your team.