21 Oct How Can I Prepare My Business for the Upcoming Recession?
Economists, stock brokers, business owners and individuals alike should have a vested interest in the state of the economy, because it is likely to affect just about everyone—granted the particular consequences vary considerably.
Mixed opinions abound over whether we’re due for a recession after the decade long expansion we’ve had since 2009 or whether people are simply applying lose patterns that don’t really mean anything concrete.
The bottom line is that It’s always impossible to predict with absolutely certainty whether or not there will be an economic recession at any time. However, the best course of action for either outcome remains the same, tried and true through time and time again: you should always act as if there is one just around the corner—and plan accordingly.
Small business owners especially need to be ever vigilant of the possibility of the economy taking a turn for the worst and take precautions ahead of time. Here’s what’s most important to keep in mind to protect your business in an ever-changing economy.
Know Your Industry, Size, and Company Culture
This is some more quality, evergreen advice: knowing your business inside and out will serve you well when protecting it from a recession. Keep yourself well-informed about how businesses in your industry have done during different time periods and economic situations, and look for businesses that had a similar mission, size, and company culture to draw more accurate comparisons.
What steps have other, similar companies taken to increase their economic stability? Did they work, or did they have unforeseeable consequences? While every business is different, you are not recreating the wheel—learn from others wherever you can.
If you’re considering a big move that might even seem to have no possible downfalls—take the time to research how similar moves have played out in similar businesses. You might be surprised by the patterns that can emerge from a bit of research.
Less Is More
Even in times of economic plenty, be protective of your business assets and profits. Reinvest in the company, employees, and necessary growth expenditures, but also be certain to have money put aside for unforeseen hiccups and downturns in the market.
Are you prepared to stay afloat if you lose a key, high-paying client? What about if your best employee quits without notice, or has to take time off due to a personal problem? Anything can happen, anytime, recession or not. While this idea may at first instill anxiety, becoming accustomed to having a multitude of backup plans will reduce so much anxiety in the long run.
Putting some money aside as a business emergency fund is always a good idea. A client might default or be late on a payment, an employee might occur an injury, or a piece of vital equipment might break.
Beyond backup funds, you should also have backup plans for your staff. Be sure that at least two people know each company process incase one leaves the company or has a personal emergency.
It’s also a good idea to have a bank of contractors, freelancers, and potential part-timers that you can rely on when times are busy or if something affects your main team.
Quality Is Worth Investment
Inefficiency, bad customer service, and poor management can cause a business to go under even during good times, and it is much more likely to be the straw that breaks the camel’s back during a recession.
Don’t cut corners anywhere you can for the sake of spending some cash—there are things that are worth investing in—most importantly, your team and your services.
Pay your employees what they are worth to you and be willing to compromise and work with them to ensure they have a positive work environment that offers them opportunities for growth.
If an employee who adds a lot of value to your team asks for a compensation increase, consider how much this would actually cost you to follow through on. If you avoid offering more for fear of loss in profits, you might end up losing much more if that employee finds someplace that will match their request.
If you can’t afford to increase wages, consider ways in which you could meet them halfway such as offering a more flexible schedule, privileges like working from home, or more choice in the work they take on. It’s worth your investment to have fewer employees that provide you high value than to have more that end up costing you long-term. Not to mention, if and when the next recession comes, these employees will be the same ones that you will count on to weather your business through it.
The same sentiment applies to your services—don’t skimp on programs, equipment, or labor that is necessary to get quality results for your clients. Not only could this affect your profits with existing clients, but it could affect your company reputation and ability to get referrals going forward.
Diversify with Meaning
Don’t add more products or services for the sake of having more. It’s most important to focus your attention on quality and sustainability with the options you have.
However, if there are areas where it makes sense to diversify—for example into related products or services that are connected, this can be a good way to establish resiliency in a changing market.
For example, sometimes our clients decide that they don’t want to invest in social media marketing anymore—something that we don’t usually recommend, but it does happen. These clients often times love our service and team but are not seeing the results they want from their current campaign. The good news is, we have alternatives to offer them—from SEO services to new website builds to a video marketing campaign, we offer our clients a variety of different options to achieve their goal of increased market exposure.
Remain focused on outcomes and value that your company provides, rather than on the specific products or services. While the methods may come and go with changes in the market and technology, the outcomes and customer service your team offers can remain a constant draw.
Marketing Is Always Worth It
Finally, wherever you cut costs, don’t do it in marketing! While it may seem like a luxury or optional venture that could just bring in a few extra clients or raise your professionalism, it is essential to long-term business success. In the aftermath of the last recession, ad spending in the U.S. dropped by 13%.
Studies indicate that maintaining or even increasing your budget for ads and marketing during a weaker economy can increase sales both during and well after a recession. Especially if you have high competition—you may be the only one in your industry that’s still running ads during the recession, and that could get you more clients than you might think.
It’s also important to consider promotions, coupons, special deals or even payment plans or delays for your loyal customers, especially if you aren’t able to bring in as many new ones. A bit less payment, or a late payment, is certainly better than nothing at all. This can show your customers that you value them and are understanding of a potentially rough economic situation—and build further trust and brand loyalty for when the economy turns around.
If you have any concerns about your company’s long-term marketing and digital branding strategy, get in touch with Social Spice Media to learn more about creating a marketing plan for your business and how you can effectively spend your marketing dollars. Our team pays attention to your goals and creates a custom strategy that delivers results. Do you know someone who could benefit from our services? Refer them to us today! Our team is eager to connect with businesses in any industry. We serve the local needs of Ventura County and Santa Barbara as well as anywhere in the United States.