One of the scariest aspects of owning a business is being tied to an unpredictable economy. As recent events have illustrated all too well, businesses may be susceptible to bumpy rides caused by various economic factors. Given the uncertainties within the economy, it is important for businesses to be prepared for occasional bad times.

One way to do so is by saving enough to ride out the rough spots. As such, 11 members of Forbes Finance Council share their best methods to make sure businesses have enough money to weather any economic downturn.

Members share tips for weathering an economic downturn.All photos courtesy of Forbes Councils members.

1. Secure A Line Of Credit

Businesses should secure a line of credit through a major bank or credit union now, while they can. Many times, when businesses face rough seas, access to these products is much more difficult. Secure the line now, and don’t use it unless you have no other resources. It can make the difference in saving your business should times get turbulent. – Bradley W Smith, Rescue One Financial and Simple Path Financial

2. Maintain A Cash Flow Forecast

Most businesses can forecast cash receipts and expenditures fairly accurately eight to 12 weeks out. This provides a view of your weekly cash needs before they arise. You can then stress-test these to see what happens if a customer doesn’t pay as usual. Updating this weekly provides creates an historically-based appropriate cash cushion to weather most changes so you don’t under/over save. – Chris Tierney, Moore Colson CPAs and Advisors

3. Cut Out Frivolous Spending

A bear market is a great opportunity to reassesses your business and find the areas in your budget that aren’t generating value (ROI) and cut bait. Not every expense can be justified in every type of economy. Be pliable with your business model, and don’t waste money on broken systems or processes. Every dollar counts. – Ross Garcia, Divorce Mortgage Advisors, Survive Divorce, and PREI Capital Group

4. Diversify Investments And Plan Ahead

Ensuring that businesses have enough money in liquid assets to cover approximately six to 12 months of expenses, diversifying their investments to better protect their capital from risks such as individual stock exposure, and proper planning for the long-term (including efficient work flow) are all ways business can remain financially secure during an economic downturn. – Stacy Francis, Francis Financial, Inc.

5. Plan For Two Consecutive Downturns

As it’s always been said, the trick to staying in business is staying in business. Plan for not one but two downturns/cycle of losses. By having a contingency plan to help stay afloat during bear times, you build a foundation that will help your firm sustain whereas others may not. You’re building a firm for the long-haul. Plan accordingly. – Atish Davda, EquityZen

6. Keep One Year’s Worth Of Expenses In Your Account

Realistically, you’ll never know exactly how much you need to save in order to survive and wait out a downturn in the economy. That said, I try to keep one year’s worth of business expenses in the business bank account. Being educated about upcoming changes is one thing, but it’s also about being able to pivot and drop fixed expenses so you can survive and not burn through all of your cash. – Jared Weitz, United Capital Source Inc.

7. Sweep Funds Into A Savings Account 

If possible, businesses should sweep funds into a savings account on a periodic basis. Putting aside a percentage of profits monthly can help build an emergency savings account. Some banks offer low-term CD accounts. Businesses can consider putting the cash toward low-term or no-penalty CD accounts to help accumulate some growth. – Ben Jen, Ben Jen Holdings SLLC

8. Stick With Growth And Innovation To Stay On Track

Company executives should stay calm in moments of uncertainty, like last year’s fourth quarter, so they can profit from the uncertainty. Always have a long-term plan rooted in solid data and research so you’re ready to act on your vision instead of freezing like a deer in the headlights. Stick with growth and innovation to stay on track. That way volatility is just another kind of opportunity. – John Bartleman, TradeStation Group, Inc.

9. Evaluate How Your Business Handles Cycles

Most businesses only begin to think about cash flow and how to weather a coming storm when it is already on the horizon. For most businesses, 2018 should have been a good year and a great opportunity to store up cash for any future downturns like the one likely in 2019. Having a plan for downturns will depend heavily on having a plan for the upturns when you can save your cash. – Vlad Rusz, Vlad Corp. USA

10. Use Tax Savings To Grow Business

Adjusting interest rates make day-to-day debt service more expensive, and the bottom-line profit added by using debt to push business growth is, of course, uncertain. The new tax code is saving businesses profit tax dollars, as they will soon see this business tax filing season. The government’s hope is that these tax savings are used to fuel business growth, reducing the rate of increased debt. – Perry D’Alessio, D’Alessio Tocci & Pell, LLP

11. Have A Three-Pronged Approach

Use a three-pronged approach. First, build your cash savings balance to about three months’ worth of the business’s operating budget. Second, increase your marketing and investments in infrastructure while your competition cannot. Third, identify discretionary expenses you can reduce when rough spots happen. However, don’t make your marketing budget one of those expenses. – Justin Goodbread, Heritage Investors

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