5 Strategies To Get Your Business Prepared
Will they or won’t they? Raise interest rates that is. To date, the Federal Reserve has raised interest rates twice this year and is forecasting two more increases before year-end. While President Donald Trump is breaking with tradition (President’s do not typically interfere with the Fed’s decisions) and trying to talk the fed out of more increases, it appears that despite his protests they will move forward nevertheless.
Most of us have been in business long enough to know that a single rise in interest rates can have an impact on the economy, but four in one year? That that will change on how people will borrow, spend and put money back into the marketplace.
So no matter which side of the fence politically you sit on – thinking the Fed should not raise interest rates – or being that person in full support, the truth is you and I have no control over what the Fed does. Their decision may impact our plans for growth, but in the end, we have no say.
However, we can anticipate the decision they will make, and make some changes now to position ourselves for a different marketplace.
So how do you prepare for rising interest rates? What can you do now as a business to ensure that changes with the Federal policy and their impact on consumer spending will not derail your plans for business success?
5 Strategies to Get Your Business Prepared:
- Pay Attention – to the Fed that is. What the Fed may do and what they ultimately do will both have an impact on consumer mindset and your plans for growth. You need to pay attention, read the reports, watch the news, and follow those economists that will be making predictions. The marketplace changes as much based on what the Fed is predicted to do, as it does based on their final interest rate decision. The better informed you are, the better positioned you will be.
- Pay-Down Debt – rising interest rates can impact the flow of money into the economy, the rate at which businesses growth, as well as the cash flowing through your business. When the signals come that the Fed is going to raise interest rates, it is time to start thinking about taking those final steps to pay off debt. Especially debt that carries a variable interest rate.
- Find Lower Interest Rates – if you have debt that you can’t pay off or revolving debt that you use the fund your business in times of tight cash flow, then it may be time to shop around. Before the Fed raises rates, look around and see if you can find a lower interest rate. Doing so before the Fed raises funds may make it easier to find, qualify and ultimately move the debt. You will also, if the fed raises rates, be better positioned to absorb the cost.
- Do A Business Review – rising interest rates will impact the economy, and most likely slow down consumer spending and the level to which businesses buy and borrow. The rising interest rates could affect the cash flowing through your business, and your ability to reach your business goals. So now is the time to do a business review. Take a step back and analyze, before it happens, what a rising interest rate may do to your business. Maybe you keep six to eight months’ worth and do a final push knowing sales will be harder in a higher-interest-rate environment.
- Get Smart – and last but not least, get smart! Interest rates go up, and they go down. That is just the world that we live in, and the Fed is doing what needs to be done to make this economy healthy. Your job is to know the interest rate environment and adjust your business strategies accordingly. To succeed in business today, you need to be proactive!
This is going to be an interesting year, if the Fed raises rates two more times, it will significantly impact how we grow our businesses, and even just the hint of rising rates can make a shift. Don’t wait for the Fed’s decision to affect your business. Use these five strategies to get prepared!