Can a Woodwork/CNC/Laser Craft Small Business Survive a Recession?
In this article I will discuss the growing fears of a recession and what you can do to help prevent your business from struggling or failing. From some very simple tips to ideas I have gleaned from some top businessmen and mentors, if you are worried, this is worth the read.
Recession. I have been thinking about this one a good bit lately, and it comes with some heavy truths and some bright sides. So can a small business that focuses on crafts like wooden flags, cutting boards, ear rings, customized tees or an number of other crafts survive a recession?
Simple truth. YES. But, it won’t be that easy, and if you think about it there is even room for growth. You need to ask yourself about things like, “is my business model defined and sustainable?” And, “Am I willing to make the best decisions for the sake of my business?” These questions and concepts could make the difference between thriving, surviving or failing. So, keep reading and I will walk you through a some real advice that could really make the difference.
Lets Start with, "are we headed for a Recession?"
The best models and predictors can’t really tell you yes or no, but yes. See part of the problem we have in 2023 that we didn’t in 1910 is the freedom of with information moves and how volotile it can be. Because the stock markets would take a significant plunge as soon as someone like President Biden or Elon Musk said “we ARE in a RECESSION,” they can’t say it.
- According to a recent Bloomberg MLIV survey we are at a 48% chance of Recession this year.
- Statista says their is a 54.49% chance we will hit full Recession by February 2024
- Forbes is saying, it’s not imminent.
So, some conflicting information. Bottom line from a guy that has been around a little while, the dollar is down (and losing ground) and inflation is higher than I have ever seen it.
But what is a recession anyway?
Wikipedia defines a Recession as, “in economics, a recession is a business cycle contraction that occurs when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster (e.g. a pandemic).
In the United States, a recession is defined as “a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” The European Union has adopted a similar definition.In the United Kingdom, a recession is defined as negative economic growth for two consecutive quarters.”
All Doom and Gloom, right?
Absolutely NOT! What happens when there is a forest fire? The old growth, debris and sick plants die AND this allows for tremendous GROWTH of new life!!! Taking the analogy a step further, the fire that burns all the old, actually activates pine cones to release seeds. Cool story, but that’s not why we are here.
For real. If you are smart about your business, and start now, you should have no problem “weathering the storm” and possibly will come out ahead. The following suggestions are really the best tips I have accumulated from my mentors group and experiance.
What steps can I take to Recession-proof my Small Business?
Next, when we talk about recessions enviably you ask yourself, well what can I do to prevent my business from going under? So absolutely you have a few steps that you can take now in a craft/cnc/laser business that will help your business later.
- Small Business Plan (SBP): One of the big differences between million dollar businesses and small businesses is actually having a WRITTEN PLAN! Their are tons of templates/information on Google and you can actually have some AI like Google Bard to help you write it. Bottom line, it’s not just a document though, you have to put thought into it. The WHYs, HOWs and WHENs are critical.
- Road Map: The Road Map goes with the SBP. This is the brass tacks – the actual information of what you plan or want to do. Usually broken down by month, it shows how many of “X” you plan to produce, when you plan to market, best time of year to pick up “Y” supply, Estimated costs, Estimated revenue, events you plan to attend, when you are going to sit down with your CPA, Business trips, Contingencies, Expansion, Power Costs, Personal goals and vacations. It IS the map of how you plan to get from today, to next year.
- Merchendise: What do you sell? Consider doing a deep dive about your product and what will sell better in a recession. I have more about that below, but news flash! You won’t be selling to mom and pop, they won’t have extra cash.
- Branding: Starting to market a strong brand now will affect your proformace later. Does that mean spending money on advertising? No, not all ways. One good method is just having business accounts on platforms such as Facebook, Instagram, Twitter, YouTube, Pinterest, etc. You don’t have to be one of those crazies that post content all the time either! Just document your work, under your name so people can see it. Also, with your business account comment on other peoples work in groups you belong to or provide help when another person in a group is trying to figure out a problem.
- Logo: Also under branding I would add a good logo. You need to be remembered. In a land of thousands o small businesses they need to pick YOU.
- Distributers: Setting up and becoming more effcient with who/what/why you buy you materials from will literally save you money. I even go as far as getting cut-offs from cabinet shops and leftovers from plastics shops. They are out their and I have never had to beg, it’s trash to them and you slove a problem by taking it away.
- Partnerships: Setting up mutually benificial agreements with people that have businesses “like” yours or are a one step different than yours can pay huge! I have a company I love that cuts down dying trees. We work together, seperately, by taking those trees and making things from them. I make cutting boards from their trees, I put both of our logos on them, they sell them in their store, we both win.
- Maintenence: In times of plenty, hone the axes. Consider doing the maintence you have been putting off, now. Recession is not here yet (earliest expectations are July 2023) so fix things before they break. If you have to buy a new Table Saw when you are not bringing in much money, you just might be done.
- Grants: So, many would say Grants & Loans. Go for Grants. They are out there for small business and you don’t have to pay it back. Look for oppurtunities NOW, because once money gets tight you will be compeating with everyone.
What benefits come from an Economic Down-Turn?
Benefits to a recession, again, absolutely. Like I said beforewhen things get difficult like in that forest fire, you will have new oppurtunity and growth. Here’s how:
- Competition: As it gets harder, you will have less. Business owners that are failing will have to go get regular 9 to 5 jobs.
- Expenses: Items (you name it) generally get cheaper in an economic down turn. That means oppurtunity for you if you plan right.
- Employees: You will have access to better talent. Those genuses that are out their as competition, might just come work for you.
- The Real Deal: A recession will show who the fakers, half-commited, quasi-business owners are. They will fail.
- Equipment: Great time to buy cheap equipment from others going out of business. Dead honest, I am planning on buying another CNC and Laser if/when the recession hits.
- Hiccups: Hard times don’t have time for hiccups, it shows the real distruptors in your business. Once you can see the issues you can get rid of them.
- Frugalness: And this will help you for the rest of your life. It will teach you to stretch a dollar.
- Investors: With less business, investors have less to invest in. It makes you a shiney new partner.
Some final thoughts about surviving and maybe even thriving in a recession.
- The upper class is less effected (spending wise) than the middle or lower classes. What does that mean for you? It means market your products to the upper class. Consider creating a more high end version of what you do. Instead of the Ikea Laser burned Logo Charcuterie board, maybe start making mohagany end grain boards.
- Tap into Interior Designers. The “rich” will still be changing their cabinets and redesigning their homes. If you make friends with the Interior Designers and they know what you make and can do … $$$
- Talk with high end retailers. Custom always sells to the upper class, and high end retailers know that. Make them a market (hell, do that now, why not).
- Lower your bottom line as much as you can. Seriously. My Grandma survived the Great Depression and you know what I remember here doing? Washing the aluminum foil she covered leftovers with. Why? Cuz aluminum foil is more expensive than soap and water. A great example- I worked with a phenomenal group of guys that took 90 minute lunches at restaurants EVERY day. Make a sandwich and eat at work. You will save TONS of money & time.
- Invest TIME & EFFORT into good photography. The difference between a phone snapshot (although the cameras on phones today are excellent) and a well laid out, lighted photo is absurdly huge. You will make your money back with the investment of time and intersectionality.
Can a Woodwork/CNC/Laser Craft Small Business survive an economic downturn? Absolutely.
You do so with intentionalality. Do so with hard work and out thinking the businesses around you. Make your plans now, hunker down now, make a Small Business Plan & Road Map, meet Interior Designers, do it all now. Your business can be reactionary to your situation and put out fires all day, or you can plan to be the pine cone that springs to life when the recession hits.
Make sure to check out the rest of my website, store and blog! My store has many of the common items I personally use and the WHY behind it.
Have a great one & good luck in the coming year!
Royce
Hill Country CNC & Woodwork
Hill Country CNC & Woodworking is an affiliate marketing business, but it is one with ethics and morals. We only promote the items that we use in our daily business. Let’s help each other! I will give you my experience (and discounts sometimes) and you can help me grow.
#recession #smallbusiness