The pains caused by a recession can be excruciating, which is why most of us dread the thought of it.
A recession can mean massive layoffs, jobs becoming harder to find, and wages frozen, which means consumers hunker down and spend less-- often worsening the economic slowdown unknowingly.
For most businesses, especially small businesses, recessions can be brutal. Just take for example, the Global Financial Crisis (GFC) that struck the world in 2008. Between December 2008 and December 2010, approximately 1.8 million small businesses shut down. When Investopedia looked into the impact of the financial crisis on small businesses after a decade, they found out that business creation has not yet returned to pre-crisis levels.
And now, as the battle against COVID-19 is not yet over, global financial markets have been impacted, consumers are tightening their belts, and general demand is falling. All these signs are pointing to one thing: the next economic downturn may just be right around the corner.
Don’t get us wrong, we are not here to scare you. Our hope is for you to build a successful, future-proof business. That means you need to be aware of the possibility of another recession so you can prepare effectively.
In this article, we have tips to help you not just survive a recession, but thrive.
If you want your business to thrive during a recession, you likely need to grow your customer base. One way to do this is by digging deeper on your target market and coming up with ways on how you can tweak your offers to entice them into buying from you even during tough economic conditions. You should also research your competitors, identify your point of difference and plan how you will communicate those selling points to interested customers.
We understand that getting more clients during a time like this is easier said than done, but what many business owners fail to realise is the fact that their existing customers are often their best opportunity to make more sales. Keep your customers happy, identify how you can add more value into their lives, and reach out to them to take advantage of untapped sales opportunities.
The concept of “diversification” is usually taken in the wrong way. Simply adding a host of different products and services to your offerings will not magically transform your business. In fact, it may be a waste of time and resources and stop you from focusing on the things that you do best.
During an economic downturn, you should re-evaluate your existing products or services, and focus on your key strengths or core competencies. If you’re selling physical products, this is also the perfect time to re-evaluate your inventory management and adjust based on the products that you would want to focus on. Don’t ignore the potential of reducing your inventory costs by only ordering the items and the right amount that you need.
One of the most common mistakes of business owners is that whenever they need to minimise their expenses, they automatically cut their marketing budget or even re-allocate it entirely.
Marketing and sales go hand-in-hand. So if you want to keep a healthy flow of sales coming in, you need to have strong marketing as well.
In today’s fast-paced world where consumers are restless, and during a recession where they will become even more careful in their buying decisions, marketing is your tool to help them find and see your products and services as the best options in the market. So instead of quitting marketing, now is the right time to step up your marketing efforts.
Those who go full survival mode and simply limp through the recession will be much slower to recover and have a lower chance of catching up.
Secure your cash reserves and know when is the right time to play offence. Think about ways to innovate your products and services, streamline your operations to boost efficiencies, expand your market share by improving your offerings to be 10 times better than your competition, and consider mergers and acquisitions.
There is no specific strategy that will make your business 100% recession-proof, but these tips will definitely make a difference in how well you can navigate through these difficult times.
In the business world, ups and downs are normal and growth stalls due to cyclical reasons are inevitable. At the end of the day, thriving in a recession boils down to having exceptional industry expertise, getting better business visibility, implementing efficient processes and best practices, as well as having a business advisor who can provide you with expert guidance, fresh insights, and timely advice.
What’s next for your business?
Get in touch with us and we’ll help you work out a strategic plan.