You might be feeling nervous about a recession, but there are things you can do now that will help you survive and thrive through it.
When I was 17, I was homeless. It was 1999. Australia’s economy grew by 4.3% and was well above earlier expectations. I learnt very early that it didn’t matter if the market was good or bad, poor business decisions could lead to a catastrophic failure.
As I got older and wiser, I’ve learnt a lot of things that have enabled me to move from being homeless to owning my own home and running a business with a team of 6. Things that form a constant piece of my ongoing business strategy follow.
Develop a diversified marketing strategy:
It is crucial to have a diversified marketing strategy that considers traditional and digital tactics. Traditional methods include television, radio, print ads, or direct mail. Digital strategies may include search engine optimization (SEO), website design, content marketing, email campaigns, or the new kid on the block — video marketing/video content. Diversifying your approach allows you to reach more people and make your business more resilient if the economy shifts significantly. It gives an extra edge to a company to remain competitive and reach new audiences during a recession.
Review pricing models:
When the economic outlook is uncertain, business owners should take the time to review their current pricing models and consider ways they can adjust them to remain competitive during a recession. Options may include lowering prices in certain areas, launching promotional deals that provide discounts for customers who purchase items in bulk or signing up for longer-term contracts with the company. Additionally, creating packages combining services or products into one cost-effective offering can help save customers money while allowing businesses to generate revenue during difficult times.
Establish an emergency fund (I call this a war chest):
I call this a war chest, which probably speaks more to my PTSD brain than anything else (you can read more about this here); others would call this an emergency fund. Have it established before a recession hits, so you’re prepared for any unexpected costs as a business. My general rule is to have reserves that would carry me through 3 to 6 months and keep building it back up – the average period of an economic downturn has historically taken 10 to 18 months. That may arise from decreased sales or an inability to access credit from banks and other lenders due to tightened lending requirements caused by the economic downturn. Even if businesses have healthy cash flow during regular economic times, setting aside some funds as part of an emergency fund can help cover unexpected expenses during a recessionary period.
Reevaluate supplier relationships:
Many companies rely on long-term suppliers even when market conditions change — but during a recessionary period, it is essential to reevaluate all supplier relationships and look for opportunities to reduce costs without sacrificing the quality of product or service offerings. Strategically cutting costs with suppliers through negotiations or finding alternative solutions can help ensure financial stability during tough times while minimizing disruption to customers who rely on consistent service offerings from your business.
Utilize data analytics for insights:
Data analytics tools are invaluable resources for helping business owners understand how their processes are performing in real-time — and when it comes to preparing for a recession, these insights are even more valuable as they give decision-makers access to actionable information about customer trends and spending habits which will enable them to make better decisions regarding how operations run during challenging economic times. Analyzing customer data could reveal patterns about where purchases occur most frequently, informing decisions about where somebody can offer discounts to maximize sales efficiency, retain customers and stay afloat until the economy recovers.
Need to chat about how you can scale your business in a tough financial time? Reach out and connect with me on LinkedIn here. Want more insights into things you can change and control in your business now that will support your business growth? Sign up for our new newsletter, ‘The Score’.