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During times of uncertainty, it’s common for business owners to begin to panic.
Revenue begins to drop, deals fall through, and the expectations you had for your company in the upcoming months are suddenly put into jeopardy.
It’s a scary time, and many entrepreneurs handle it so poorly, that they suffer permanent damage as a result – if they manage to stay in business at all.
However, it certainly doesn’t have to be this way.
Recessions are an inevitably, but they do not always have to be considered scary news. In fact, more so than anything, recessions can provide business owners with opportunities.
While businesses are falling left and right, you have the capability to grow through the next recession – capitalizing on the poor decisions of your competitors.
However it takes a well thought out, well executed strategy in order to work.
In this article, I’d like to share with you 5 steps you must take if you want to thrive during the next recession, and share some advice on how to begin implementing your strategy today.
1. Slow Down, and Start Preparing In Advance
During times of crisis, people often engage in emotionally impulsive, irrational behavior. They make lasting decisions in a matter of moments, that can quite easily screw them over later.
I’ve been guilty of this myself. I have cancelled projects on a whim and lost a lot of money as a result, all because I’ve failed to be level-headed at crucial moments.
Don’t act like this. Few decisions need to be made so quickly.
Slow down, and calm down. Don’t make extreme decisions like letting staff go, cutting important budgets, or selling off assets on a whim. Think things through logically.
This is made much easier if you already have a plan to combat recessions in advance. By developing a framework and creating steps to protect your business right now, you’ll know exactly what steps to consider taking. You’ll also be able to make better predictions about what’s to come, and have more realistic expectations on your company’s performance throughout the recession.
In any case, it certainly couldn’t hurt.
2. Double Down On Profitable Advertising
One of the primary reasons that businesses suffer during recessions is that they go into complete conservation mode – cutting costs so drastically, that they even kill what’s making them money in the first place.
Logically this doesn’t seem to make sense, but fear and panic can take a real toll on entrepreneurs.
If there are only a few things to avoid cutting during recessions, one of them has got to be marketing.
It’s easy to believe that people aren’t going to be interested in buying what you have to offer, but cutting marketing budget brings you a couple of critical problems:
- It deprives you of revenue in the short-term, that may help keep your company alive.
- Consumers (and your existing customers) forget about you, and you jeopardize your long-term market share.
Your existing customer base are your greatest tool to survive a recession comfortably, so that last point is pretty important.
Maintain your marketing while so many other companies are cutting it, and you’ll surely come out ahead once the recession is over.
3. Ensure You’ve Hired The ‘Right People’
Recessions aren’t just taxing on business owners, they’re taxing for the employees as well.
Not everyone is up for the challenge of thriving during an economic recession. Morale and productivity may even drop, as employees fear their jobs may ultimately be at risk anyway.
As a leader, it is your job to inspire your employees and unite them towards a common goal. However, it’s also your job to ensure you’ve hired people that are willing to give 110% for your team as well.
It’s obvious when employees don’t truly care about their company, and instead focus only on their paycheck. If your company is made up of a lot of these people, it is particularly vulnerable during a recession, where everyone may be required to work harder only to achieve the same results.
During the Great Recession, it wasn’t the companies that laid off the most employees that did best – it were the ones that utilized the right employees to drive operational efficiency.
Prioritize talented people with the right mindset towards their work – even if it costs your company more money in the short-term.
Bonus Tip: If you’re looking to hire your next staff member as cheaply as possible, I highly recommend looking for roles in your company that can be outsourced to workers in the Philippines.
4. Use Recessions To Try Out New Systems
Some of the world’s greatest innovations came during the toughest of times. However, you don’t need to invent something that changes the world in order to innovate within your own company.
Recessions are the perfect opportunity to try things differently, in an attempt to reduce cost, increase output, and become more efficient overall.
When things are going well for your company, it is easy to relax, and continuing to do whatever is working at that moment. However, this doesn’t always mean you’re utilizing your resources to their maximum effectiveness.
Consider trying new things out, and implementing low-cost systems that you previously cast aside during periods of prosperity.
Even something as simple as developing software for routine business tasks can ultimately save a ton of time and money, allowing you to run your company even better when the recession subsides.
5. Decrease Reliance On Any One Thing
I’ve shared a lot of important advice throughout this article so far, but none if it matters if you’ve already given up control of your company.
Businesses leave themselves vulnerable when they rely too much on any one thing. This could be a single supplier, a single revenue stream, or a single client. If you’re a startup with a limited runway, it could also be a single source of funding or limited access to credit.
As I write this article, the world is experiencing the outbreak of COVID-19. Inside of various entrepreneurial circles I like to spend time in, I am watching business owners panic – not because their customers are failing to buy, but because their supply chain has been completely disrupted by the current events.
They were dependent on a single supplier in order to serve their customers, and now can’t meet even a fraction of the demand that they need to.
When I wrote my article on recession-proofing your small business, the one vital thing that I failed to mention was diversification.
Never give up your company’s leverage. I started this article by stating a scary reality – deals fall apart, and expectations crumble during periods of uncertainty.
Don’t become a casualty of somebody else’s doing.
Recessions are only scary if you allow them to be.
Whether you like it or not, your company will be faced with an economic recession at some point. How your company fares throughout it will depend entirely on the choices and the planning you do today.
The unfortunate thing about crises is that nobody thinks about them until it’s too late.
I hope that this article has given you some things to think about. I’d love to hear what action steps you plan to take next, and how you plan to grow throughout the next recession.
I believe you can do it!
To your success,
– James McAllister