With so many indicators pointing towards a recession at the moment and so many other economically
stressful factors going on such as inflation, high gas prices, increasing shipping costs, wage costs and
pretty much all costs it is more important now, than ever, to continue \to build value into your business.
With the current state of the economy, small business owners are faced with multiple challenges. While
the fear of losing value in your business is very real and justified, there are ways to be proactive and build
value in your business during a recession. You may have to work 10 times harder through the difficult
financial times, but you will succeed if you put in the effort. Eventually the market will correct and those that will have made it through successfully will be poised for even more success on the upswing.
1. Focus on Cash Flow & Cost Transformation
If you aren’t already on top of your inflows and outflows of cash, now is the time. Get the full picture of your business financially and map out your cash flow and check your liquidity. In order to grow your business, you need to know where your baseline is. As you do this you will likely come across areas for some possible cost cutting.
While it can feel intuitive to cost cut one’s way through a recession, business growth during a recession will actually require cost transformation rather than cost cutting. While trimming the fat can be helpful it can also hurt the company it too much is cut in the wrong area, hurting long term growth. Instead of focusing on cutting costs, Cost transformation looks at maximizing the cost efficiency and strategy.
Reviewing analytics and data and implementing or increasing automation in as many aspects of the business is an excellent way to accomplish this.
2. Lose the losers.
This may sound callous and seem counter intuitive but on a very serious note, cut the bottom 20% of your base. There is method to the madness… these are the customers that are slow to pay, difficult to work with and require disproportionate amounts of resources when compared to the amount of revenue that they product. Go ahead and get rid of them now.
As you increase your marketing efforts you will replace them with the same resources being wasted on the lower yield customers. Don’t Stop there. but drop your bad employees too. Chances are you have an employee or two that you have kept around as you were in desperate need of the extra manpower. Get them gone yesterday. Both the business and your customers will be better because of it. Be sure to
be transparent with the rest of the team as to why you did so and let them know it was for the longevity of their positions and the health of the business.
3. Streamline the workflows and offer a better experience for the clients.
With the extra free time you have now use it to improve your internal workflows that can’t be automated. Take time and focus on the quality of the services and the product that you deliver. To come out ahead at the end of this downturn you must be providing the best in service and quality and in a better way that your competition.
As society and businesses around yours are impacted by the downturn their purchasing choices and decisions change to focus on filling their needs. Paying attention to insights about your customer base, demand need and challenges which in turn reveal new opportunities for business growth during a recession.
Be able and willing to pivot quickly. Some businesses find it more practical to reach out to more customers and create a broader base to pull from. Others will learn that becoming more niche focused is a more lucrative move for their vertical.
Do an internal market analysis and randomly select 12 customers to call and ask them to rate your business services, products and experience. Ask them what they like the most and if they could change 3 things about your business what that would be. Then create from that a list of project and processes to improve upon as a team.
4. Create New Services & Products
Now that you have done a ton of homework. Taken a good solid look at your finances, cut some dead weight and evaluated what is important to your clients use this information to develop some new services and products to fit the current needs of your clients and community. If you are a retailer look into new product lines to bring in. if you are a wholesaler develop products which are going to better meet the needs of your customers during these tighter financial times.
Use these new products and services to help nurture and grow your existing customer
relationships. People will remember this, and you will not only be helping your clients during a rough time, but you will come out farther ahead at the end of it.
5. Up Your Marketing Game
You’ve revamped the business work flows and processes and you’ve got new services and products to promote to your fantastic clients. Now is the time to up your marketing game! Increase those marketing and advertising efforts during this time and you will reap the rewards. Most of the long-time players are fully well aware by now that during times of economic downturn and slowing growth, that many advertisers and competitors will be reducing their ad spends. This is a fantastic opportunity to increase
your own campaigns and come out ahead of Jones. It also gives you more money for your ad spend. Take advantage of the moment.
While we are pretty clearly in some uncertain economic times there is no reason to let it get you down. With a well played strategy, hard work and creativity, you can not only keep your business afloat during the next recession, but you can grow and add value to it as well.
Written By Emily Geisler