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97: What You Need to Know So You Can Prepare for 2020

Dec 10, 2019

With 2020 just around the corner, now is (hopefully) the time when you’re laying the groundwork for what you’re doing in the New Year. From mapping out your big business goals to figuring out where you want to travel in 2020, it’s an exciting time where you get to think about all the possibilities. Of course, we believe that the best way to plan for the future is by assessing the whole picture — even the not-so-fun stuff. 

That is why we’re sharing a few things you should be aware of in 2020 in this episode. Our hope is that, by sharing what the New Year might bring, you can build some buffer into your plans and create a really strong strategy that helps you weather anything that comes your way.

WHAT YOU’LL LEARN

  • [01:30] How the global economy may affect your business in 2020

  • [02:03] Things you should be planning and preparing for next year

  • [03:22] How small business was affected in the Great Recession of 2008

  • [05:41] Why every recession is different and why it’s unlikely to see another crisis

  • [06:23] How lower interests rates and political upheaval can affect our economy

  • [07:43] The difference between a hot and cold war

  • [09:05] Why the Feds keep lowering the interest rates

  • [10:06] The self-fulfilling prophecy of recessions

  • [12:57] The yin and yang of a recession

  • [14:08] Why we can see all of this upheaval as a sort of “rebirth”

  • [15:51] The first step in preparing for 2020

  • [16:26] How to assess your income/expenses and contracts to see what’s not serving you

  • [18:57] Why debt is a tool and how you can use it to your advantage in 2020

  • [20:11] The importance of maintaining your savings and investing despite a market slowdown

  • [22:15] Why you shouldn’t wait for a recession to start (or stop) investing

  • [24:10] The value of a financial advisor when the going gets tough

LET’S TAKE A LITTLE TRIP DOWN MEMORY LANE

When we talk about planning for 2020, we should consider all of the possibilities. On average, an economic cycle lasts about 4.7 years. This means we have about 3.2 years of growth and about 1.5 years of recession. By those numbers, we’re pretty overdue for a recession (we haven’t had one since 2008!). That’s why, on this week’s episode we want to get you prepared for 2020 in the event that a recession does hit. We can never predict what will happen, but based on historical data, a recession will occur eventually. So why not plan accordingly, right?

INDICATORS OF RECESSION 

During this episode, Dustin talks about a few of the things you might be seeing on the news lately — from lowered federal interest rates to struggles in global economies. While a lot of this can feel complex and overwhelming, there are a few ways that these “events” affect you here on U.S. soil (and might affect your business):

  1. Federal interest rates: A lower federal interest rate is a tool the Federal Reserve uses to spark the economy, but it also means they believe we’re on the verge of a recession, so they’re trying to stimulate the economy. 
  2. Hot wars are up: Hot wars, meaning on-the-ground fighting, guns, military, etc. are up all over the world. This leads to volatility and uncertainty, which can affect the markets as well as global economies. 
  3. Global growth is slowing: Nations all around the world are experiencing slower growth, which could be in part to political upheaval, those hot wars, etc. This, of course, comes home to roost here in the U.S.
  4. Low economic growth in America: All of our economies are intertwined and when global economies slow, so does ours. But remember: a recession merely means that the economy is not growing. 

So… how do you navigate all these potential signs of recession and their potential effects on your business? You plan for 2020… and listen to this week’s episode!

 

HOW TO PLAN (AND PREPARE) FOR 2020

In this episode, we walk you through the 4 steps you should be building into your 2020 planning so you can handle whatever comes your way. These steps include:

  1. Making sure your emergency fund is funded. That means 3-6 months of living expenses and 3-6 months business operating expenses, cash on hand. If you don’t have that cash saved up already, it’s time to start. 

  2. Applying for financing before you need it. You know we hate all that “debt is dumb” talk — and that’s never more true than in a recession. When a recession hits, banks are less likely to give out loans because, guess what! The risk is on them! They might not get paid if things go south. So, we recommend that, if you’re planning on asking for a business loan, car loan, or even mortgage in 2020, look at applying now. This way, you can have the cash you need when you need it, and you don’t have to worry about banks making it hard to apply for loans down the road.

     P.S. to hear more about what we think about debt, check out this about this in Episode 84.

  3. Taking advantage of the stock market. As we always say, the last innings before a recession are some with the best growth. You should be saving and investing at a steady rate and you should not stop if things slow down (or fall). This allows you to “buy shares on sale.”

     Huh?? What does that even mean?

    A share today might cost $100, but during a recession you might get 4 shares for that same $100. It may seem like you’re investing in a losing game, but when the market rebounds, you’ll have 4 shares that are now worth $100 each. That’s $400 for the investment of $100. This is oversimplified, of course but you get the gist!

  4. Hiring an advisor. When a recession hits, a good advisor is going to help you invest properly, manage your fears, and set yourself up for success. He or she is also going to help you prepare for a recession before it hits, from a business and personal financial perspective. 

DON’T GET SCARED. GET PROACTIVE.

We know that this can feel like a lot of information, and it might be a bit overwhelming or scary if you’ve never thought about a recession before. But you’re a business owner and you need to know that, sometimes, you can’t control everything. What you can control is how you prepare. This episode was designed to give you some helpful tips to build into your 2020 planning and we hope you actually use them. They could really save your 🍑 — and your business.

This is a great episode to share with your fellow biz owners and entrepreneurs, especially if you’re doing a 2020 planning sesh with them! And of course, if you want the help of not one but two CERTIFIED FINANCIAL PLANNER™ professionals, you can set up a time to chat with us and see if we’re a good fit.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.

 

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