Let’s be honest: no business owner looks forward to a recession. However, they are part and parcel of the economic cycle, and learning how to weather them is a vital skill for any business owner.
A recession doesn’t have to spell disaster for your business. There are several steps that you can take to ensure that your business not only survives a recession but comes out the other side stronger than ever.
1. Be Adaptable
If the covid-19 pandemic taught us anything, it’s that the ability to pivot at a moment’s notice can prove invaluable.
While your business’ core values should remain steadfast, be willing to reassess your business model and offerings to ensure that they are still relevant.
For example, if you own a brick-and-mortar store, now might be the time to invest in an e-commerce platform. Or, if you offer services that can be easily delivered remotely, consider making the switch to a virtual model.
There’s no use burying your head in the sand. As times change, your business has to change with them.
2. Keep Your Overheads Low
During a recession, it’s more important than ever to keep your overheads low. However, this doesn’t mean skimping – it’s about ensuring that every penny you spend generates a worthwhile return. Frittering away money on unnecessary luxuries will only put you in a worse position when the recession hits.
Look for areas where you may be able to shave costs without compromising on quality. For example, could you source cheaper suppliers without sacrificing product quality? Are there any areas of your business where you can cut back on spending without affecting your bottom line?
Every little saving you make will help to shore up your business during leaner times.
3. Strategic Positioning
The way that you position your business in the market can make a big difference during a recession. As your competitors begin to lose their market share, you need to be ready to pounce and take advantage.
This means having a clear understanding of your target market and what they are looking for. It also means being strategic in the way you price your products and services.
For example, if your competitors are forced to cut prices in order to stay afloat, you may be able to increase your prices and attract customers who are not being heavily affected by the recession and thus looking for value.
Alternatively, you may choose to keep your prices the same and boost your marketing efforts to attract price-sensitive customers who really need a bargain right now.
4. Keep Your Employees Engaged
The last thing you need during a recession is your best employees leaving for greener pastures.
So, how do you keep your team motivated and engaged when everyone is feeling the pinch?
There are a few things you can do, including:
- Providing opportunities for development and career growth
- Encouraging a positive and proactive attitude
- Recognising and rewarding good work
- Keeping lines of communication
- Creating a supportive and collaborative culture
More than ever nowadays, employees want a positive work culture, flexibility and a healthy work-life balance. Demonstrating that you trust and value them goes a long way, particularly during a time when job security is uncertain.
5. Keep Your Customers Close
Finally, during a recession, it’s important to keep your customers close.
If you make them feel secure and valued, they are more likely to stick with you during difficult times. During a recession, the last thing you want is to be in a position where you have to invest heavily in customer acquisition because your existing customers are defecting to your competitors.
There are a few things you can do to keep your customers happy, including:
- Listening to their needs and concerns
- Being responsive to their inquiries and requests
- Delivering on your promises
- Offering additional value-adds or discounts
- Going above and beyond to exceed their expectations
In short, during a recession, your business needs to be focused on delivering exceptional customer service. If you can do that, you’ll weather the storm and come out the other side stronger than ever.
Final Thoughts
Learning how to cope with a recession is vital for any business owner because unfortunately, the economy can’t always be booming, as much as we’d like it to be. By preparing in advance and following these tips, you can ensure that your business not only survives a recession but comes out the other side thriving, so that you’re ready to embrace the boom when it comes around again.
Book a free consultation here, to learn how we can help you navigate these tough financial times.