How Business Owners Can Take Steps To Recession-Proof Their Income


It can be challenging at times for business owners to pay themselves, especially during an economic downfall. You may be dealing with sporadic revenue levels in your business, and it can be challenging to estimate how much income you will be bringing in from month to month.

Stacy Tuschl is a High-Performance Coach and Business Mentor, and founder of The Foot Traffic Formula who helps purpose-driven entrepreneurs break through their challenges, operate at their highest potential and create self-sustaining businesses. Stacy works with many CEOs who take little to no salary in the first years of running a business.

Conversely, some entrepreneurs take too much of the business’s revenue for themselves, resulting in difficulty in growing the business.

The underpaid and overworked entrepreneur scenario is often the case for many. Figuring out how to pay yourself can be overwhelming to some business owners when income can be unpredictable. But you still need to pay yourself to meet your personal financial obligations such as rent/mortgage, food, utilities, and other required bills.

Being proactive and planning for uncertain economic times is wise to do. Here are a few of Stacy’s recommended strategies to follow:

1.    Determine the salary you need to live

Every business owner has personal expenses that need to be paid, so you need to earn an income to cover those expenses. Budget for those expenses and plan your salary. Your salary needs to be a priority to pay and include in your financial planning for your business.

The most common ways of paying yourself a salary through your business are through an owner’s draw or a salary. According to NerdWallet, an owner’s draw is best for those registered as a sole proprietor, partnership, or LLC. A salary is usually best for corporations or LLC businesses taxes as a corporation.

Consult your tax accountant for expert advice and the best tax strategy and savings for you.

2.    Diversify your income

Having more than one income stream can protect your business. One of the most effective revenue diversification strategies that Stacy recommends is including digital offers in your business even if you’re a brick and mortar.

Creating digital offers such as self-paced courses, downloadable resources, membership sites, etc. is easier now than ever. A simple sales funnel (the customer journey from cold lead to paying customer) can be automated online and is the key to generating consistent leads and income.

Joining affiliate programs is another way to authentically promote products you already use and love, adding another source of income to your business revenue stream. When you are an affiliate for another product or service and promote it to your network, you can make a commission on that sale.

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3.    Build up your cash reserve

When you build up your safety net of funds, you can have a cash reserve that you can depend on when the cash is not coming in as robustly as needed. There are always highs and lows in a business, and preparing for the lows will help you get through the more challenging times, keep your business going, and meet financial obligations.

The bottom line is that growing a sustainable and profitable business that allows you to live comfortably and enjoy the benefits of entrepreneurship is essential. Putting these pillars in place to protect your income will put your best foot forward on that path to entrepreneurship, being everything you hoped it would be.

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