Recession Proof Your Business
Thursday 4th August 2022: Bank of England raises interest rates to 1.75% and warns of long recession. The Bank of England has warned that Britain is heading for a protracted recession as inflation surges above 13 per cent, causing the worst squeeze on living standards for more than 60 years.
Here we go again or does it feel like we have stumbled from one crisis to another this century. It's easy to feel all doom and gloom but it's more important from a business perspective to keep focused and have a plan to adapt if necessary. We've been here before, it wasn't so long ago I was writing a similar article at the outset of COVID-19 in March 2020, and advising customers and businesses how to continue, adapt and keep moving forward... most of them survived, but some were victims to their specific industry or/and struggled to handle the impact of the crisis.
Cleary we now have a perfect storm of political, economic and societal challenges on our hands currently - inflation, energy and food costs, war in Ukraine, still not fully recovered from COVID impact, Post-Brexit UK and then there is the China and Taiwan situation evolving... there is no immediate recovery / solution magic wand, as some of these issues can't be controlled, won't resolve themselves fast and we can only focus on what we can influence as business owners / leaders / individuals.
Much that this article is about business, I can't help but mention the most important impact on peoples personal lives at the moment, as we continue to hear about those in need having to make choices to 'HEAT' or 'EAT'. This is a difficult situation that our colleagues, friends, family are finding themselves in and it's hoped that more Government intervention and World collaboration is possible in the months ahead. Please note this is not a political statement, I couldn't care less who's in Government, as long as they do their best and right by the people they serve.
I Will Survive
I almost started singing that old favourite from Gloria Gaynor... I think I have just spared you that experience! 😂 But if you're as old as me, enjoy the original and feel the power to keep pushing forward during any crisis ahead.
The great human race always has a way of fighting through the most difficult challenges - the current and next looming crisis will be no different. It's vital that we take care of ourselves, employees, friends and family and also do everything for our businesses to continue to adapt, evolve and grow in these uncertain and continuing challenging times ahead. Don’t be fearful when others are also afraid. Do what Warren Buffett does…be greedy when other people are fearful. This may sound a bit inconsiderate during the current crisis, but it's time to lead our businesses through this crisis and not let fear make our decisions for us, think things through, plan and re-plan and keep moving. Some of the worst decisions I've made were influenced by fear and life learning has educated me to rewire my brain to eliminate fear in times of stress.
If we have learned anything from the economic crisis caused by COVID (and others such as the 2008/9 crash) is don't create business panic, keep the focus, have a plan, and adapt where required.
Opportunity in a Crisis
Some industries and business models are a bit more recession proof friendly than others, e.g. The food and energy (probably not on our Christmas Card list this year!) industries are classic examples, as we all have to eat and keep warm. Think of Maslow's hierarchy of needs and the basic needs of people (physiological needs: Food, Water, Clothes, Shelter, Sleep... Safety & Security needs: health, protection, family, social stability...). These basic needs don't go away in a recession or economic crisis and products/services that support such needs will continue to be in demand regardless of all the other parameters at play.
So on one hand if your products and services have an element of supporting these basic needs, then you have an element of recession proof already in your business. If not, read the rest of our blog to get more insight.
Make Your Existing Customers Feel The Love
Make it a priority to get to know your existing customers more and how you can add further value (goes without saying, right?!), but you'd be amazed with the number businesses who are too focused on new client acquisition versus existing client retention and who don't have the right balance, skills, strategies, processes, and systems to do this effectively.
During the COVID economic crisis, as a Digital Marketing business we had to take steps to adapt our services to be as flexible as possible with our existing and new clients, as it was vital that first and foremost we helped them survive and be prepared when market normality resumed. e.g. We had to adjust the entire tone and messaging of their marketing, help some clients pivot online, support the introducing of new products and services appropriate for the crisis we were all living through.
During an economic crisis / recessionary times we recommend businesses to adapt, vary and ramp up where necessary business and marketing communications towards their customers and prospective customers, as they have to know you're still open for business and it's more important now than ever to communicate with them via the various channels such as email, social media, paid ads/retargeting ads, offline methods and have the right messaging and call to actions to generate sales from a smaller purchasing base during these difficult times.
Plan Beyond Survival
Survive and Adapt
Equally many businesses will not survive another crisis, so it's important to always evaluate, pivot and enhance/change your business model. e.g. During COVID, the primary example was the online shift and businesses adapting/pushing more of their products and services online e.g. eCommerce, Webinars or introducing new products/services. Also some Restaurants moved to 100% takeaway/home delivery business model. So think long and hard about how you can reinvent what you do and where you might need to take your business, as one or many revenue streams could be impacted in a recession, whereas that continued entrepreneurial creativity, drive and spirt could well present you with new opportunities only possible in a recession - so keep stress testing your business model where's it is at, what products and services have an element of recession proof and why? What new opportunities do you have for new products/services/markets/business model adaptations? The bottom line is don't stand still and wait for the crisis to get deeper and play all victim.
Drive Efficiency and Effectiveness
Many businesses will have to unfortunately let staff go or fold or may find it difficult to keep on top of things. We would encourage businesses to look at what systems, processes, technology or services could help take some of the load. Good examples are CRM, Sales and Marketing automation systems that can operate without much effort and possibly with reduced staff or consider a sales, marketing or service related chatbot for example, to provide an element of self service and lead gen for customers and prospective customers. In fact some businesses are likely to procure more services and reduce their workforce during these challenging times, which is of course very unfortunate for those who have lost or likely to lose their jobs.
Winners and Losers
Economics are simple in many ways...businesses that invest and ramp up sales and marketing activity will not only survive but thrive when this latest crisis is over. Unfortunately some will have buried their heads, stopped all spending, reduced as much cost as possible and may not recover so quickly, if at all. Many businesses panic, cut back on their investments, projects and marketing during a crisis (dot-com bubble, 9/11, 2008 Crash, COVID-19 2020) - the ones that historically kept building and investing in advertising and marketing, gained the majority of their industry's market share and are still around today. A lesson for us all is we need to use the current opportunity to find balance, build, learn and be ready to seize the moment....but most of all don't panic! Please also have a read at the Forbes article on How To Adapt Your Marketing To A Possible Slowdown In An Economy This is article was written at the outset of Covid back in March 2020, but it holds true for recessions and an economic crisis in general.
7 Recession Considerations for Your Business
These will vary by industry, B2B and B2C etc:
Communicate and continue to add value to existing customers
Evaluate opportunities for diversification of your current product/service/market mix
Continue to invest in marketing - history tells us this is what recession winners do.
Consider creating special offers during this period of uncertainty.
Keep your debt to a minimum and watch your overheads and other costs
Create a crisis plan - what happens if, what will we do next... make sure your business/team are fully aligned and prepared for any eventuality.
Implement sales, marketing and service tools, so that you can drive efficiency and effectiveness across the business, taking advantage of new opportunities fast.
Recessions are not something we should fear. There will be winners and losers in every crisis. The key thing is evaluating where your business is at, get ahead of what might be coming down the road, and create a plan to win.
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