Recession is already here. Now more than ever, you need to take a step back from the daily grind of business and create a strategy to weather the impending recession storm.
Black clouds are already gathering but most business owners are so involved in the day to day business that they can not see the horizon.
This reminds me of the opening scene from Les Miserables – a hundred men or more sing an upbeat song while pulling at large ropes. The men are over 30 deep in ranks. What they are pulling is a massive ship that dwarfs everything else in comparison.
The ship being pulled in is the recession – all the men slaving to pull it in are the people running businesses.
Yes a very dark vision. But that the is the reality.
You as a founder or business owner must awaken your brand to ensure you are ready for the downslide of the economy and the resulting chaos that is unleashed.
Here are 20 ways to get ready for the recession and make your business recession-proof:
#1 Cut down on non-essential expenses – look carefully at where your money is going and see if you can cut out any unnecessary expenses that are perhaps not giving you a positive ROI (but beware of cutting down on marketing – more on that below). Outsource where you can to reduce overhead.
- Some examples of expenses that can be cut or at least reduced are unnecessary office equipment or software subscriptions. It is common to see businesses signing up to different SAS platforms for sales and marketing. See if you can find a solution that consolidates the required feature set and costs less.
- Consider paying yearly for your subscriptions to gain discounts.
- Reduce spend on business travel by planning ahead and looking for deals. Planning can cut down 30% or more of travel expenses.
- Consider downsizing your office space and finding coworking spaces or even a 100% remote working scenario.
#2 Increase your marketing budget – as you cut down on non-essential expenses, divert a large portion of that money saved towards marketing. While the whole world will cut down on marketing spend, you must do the opposite. Stop spending on the avocado toast and the frappachino but do NOT stop spending on marketing.
- Spend more on refining your brand message and image – this includes brand strategy, visuals, website updates, and other brand touch points.
- Spend more on content creation and social media marketing.
- See if it makes sense to increase your advertising budget. When times are bad, advertising platforms such as Google Ads or Facebook reduce their CPM costs. Most businesses don’t realise this. Take advantage of the reduced costs to advertise more.
#3 Figure out bottlenecks in your business – typically the biggest one would be getting leads that convert. Analyse how you are getting your leads. Identify the weak points of that funnel. Could that chain break when the recession knocks on your door? What is the weakest link?
- Where are your getting your leads from? What is the cost of your acquisition? Do you have a lead pool with a steady supply of targeted leads? These are the kind of questions you need to ask yourself.
- Consider the channels you are marketing on and the quality of leads you are getting from them to set benchmarks and to figure out what can be improved or changed.
- Review your sales pitches to ensure there is not friction.
#4 Reimagine your brand strategy and positioning – during a recession the mind set and thought process of your target audience will change. You must understand if your current brand positioning strategy would stand up to the changing audience sentiment. If you are too close to your strategy and can not figure this out, hire someone who can. This is one expense that is not an expense.
#5 Audit your message to it’s core – if you current message is working well, it may not work so well during a recession. Your audience may be more receptive to a different kind of messaging. Figure this out. Do not continue with the same messaging that worked during the boom.
#6 Rethink your core offers – this ties in with #3 above. Identify how the weak points of your sales funnel effect the conversion rate. Your offers may need to be tweaked or even changed completely to accommodate the change to the positioning strategy, messaging and the sales funnel. Do not be afraid to drop unprofitable products or services.
#7 Tweak you pricing – when you tweak or change your core offers, it is a good opportunity to figure out your pricing. A recession does not necessarily mean you have to reduce your prices. It depends on your brand strategy and positioning. Sometimes when the times are tough, the answer may be to target high ticket clients and increase your prices.
#8 Target the right customers – think of the 80/20 principle – typically 80% of your revenue is generated by 20% of your customers. Ensure that your positioning, your messaging, your core offers, your pricing and your sales funnel are all tuned to target the 20% high ticket customers.
#9 Fire your bad customers – 80% of your customer service issues are due to 20% of your customers. To ensure you focus on your best customers and allocate precious resources to pricing the best service you can, fire your bad customers! You do not want to waste any time on unreasonable or the wrong type of customers.
#10 Come up with systems – to optimise each part of your business, you must come up with systems that can be tweaked to become efficient.
#11 Be flexible to pivot if required – don’t let pride, stubbornness, or tradition get in the way of survival. Be ready to try everything and pivot if needed to go with something that is completely outside your comfort zone. Remember, success is usually all down to how you think about things.
#12 Turn up the heat on your customer service – you should be obsessed with customer service at any time but more so during a recession when getting customer may be difficult. Nurturing existing customers to create either repeat sales (if your product or service can be bought again and again) or word of mouth marketing for your brand. Turn your customer into fans through your customer service.
#13 Look at multiple channels of revenue – now would be a great time to see if you can diversify your revenue streams. It takes time to get an idea and pursue it before it starts marking money and the earlier you put thought into those ideas the better.
#14 Create a 6 months buffer – if possible, try and shore up enough money to cover 6 months of expenses and marketing budget. If you can’t do 6 months then try to have a 3 month buffer at least. This will help with cashflow during tricky months.
#15 Secure funding ahead of the recession – If you do not have much savings in the business to create the 6 month buffer, see if taking out a business loan is a good idea. If you do secure funding, remember that it is to be put aside for a rainy day. If get the loan at a low interest rate, it is worth the extra expense to just have the money sitting in the bank – ready to bail you out if things slow down drastically.
#16 Audit your marketing channels – when your marketing budget is limited, it pays to be ruthless with whom your target and where you do it. Not all channels are created equal and each one would have strengths and weaknesses that effect your marketing. Spend time to identify the best channel for your business and focus your marketing on it.
# 17 Look for partnerships – now would be a great time to reach out to potential partners that either compliment your service or add value to it. In fact, you should even consider partnering with your competitors to create win-win scenario.
- A great example is the Calle Laurel street in Logrono, the capital of the Rioja wine region of Spain. Crammed into this one single street are over 50 tapas bars. On the surface you may think that these 50 bars would be fiercely in competition with each other but these bars have worked out a way to create a win-win situation for every one. Each bar specialises in two or three specialities of tapas. That is it. Patrons would then go from bar to bar on a Pincos crawl tasting different kinds of tapas and every one gets business.
#18 Reinvent your product or service – changing mindsets and emotional landscape during a recession may mean that your PMF (product market fit) may not hold out and may buckle taking your business down. Think outside the box to see if your product or service needs to be reinvented to align with the changing tide.
- This is what TOMS did to tackle an 8 year decline – they modernised their brand, changed their messaging, redesigned their brand and their website and most importantly they redesigned their signature shoe to be more modern and comfortable. Although they probably were not just focused on the impending recession, it is a great time to be reinventing!
#20 Get business insurance if don’t already have one – an expense that is worth its weight in gold is business insurance. Not just indemnity and liability insurance but also business interruption insurance. Companies like Hiscox provide low cost insurance services.
#19 Create a content base for your brand – irrespective of what kind of market segment you are in and what kind of product or service you sell, it is always a good idea to create a content base online that attracts your audience.
- Content can be anything from a blog on your website to a Youtube channel, a LinkedIn or Twitter business page or an Instagram or TikTok profile.
- Create content that your audience will find interesting and engaging. Remember, the content base is not about sales messages. It is about giving value to your target audience.