It is essential that business owners and managers get their companies ready to not only survive the next economic downturn but possibly even grow as a result of it. This preparation should be done whenever the next economic downturn occurs.
I compiled a list of 10 strategies that can be put into action and have assisted many businesses across a variety of industries during previous economic downturns. It's possible that not all of these tactics are suitable for your company, but by picking the ideal ones from this list, you may assist any enterprise to become more resistant to the effects of the recession.
Given the current state of the economy, there is a possibility that a recession may occur shortly, which would make things even more difficult for owners of small businesses. Because of this, we have posed a question to our contributor network, which is composed of business owners, experts, advisors, and entrepreneurs, asking them to share the best advice they have for making small businesses more resistant to economic downturns and better able to survive them. Their responses are published down below, with no special emphasis placed on one over the other:
1. Gaining Command of Your Cash Flow
Taking charge of your company's cash flow is one of the most important things you can do to protect your small business from the effects of a recession. This requires you to strive toward the goal of ensuring that you have sufficient incoming revenue to cover your current costs while simultaneously putting money aside in the case of an unexpected expense.
You may, for instance, realize that you need to discover new ways to generate cash, such as by providing extra services or by expanding into other regions. You may also need to reduce wasteful expenditures and adopt a more strategic approach to pricing and your overall budget.
- Ben Flynn of Manhattan Tech Support
2. Keeping Your Strategic Alliances Active
Through the formation of strategic partnerships, one may acquire access to new clientele, markets, and ideas. Partnership opportunities may be found through an influential person or another company. Mergers and acquisitions are two more forms of business partnerships that can be formed with other organizations.
A very potent example from the Great Recession is that 10% of small firms that made it through were with the help of strategic alliances. I feel that selecting partners who have the appropriate fundamental beliefs and building connections that are honest are the two most important steps in the process of forming these alliances.
- Marie Ysais, founder of Ysais Digital Marketing
3. Increase the Value You Get From Each Customer Over Time
You should take care of the consumers you already have by cultivating true connections with them and making sure their needs are met. Your client's lifetime value will improve as a result, which is a strong indication of your company's capacity to be profitable and successful over the long run.
When you have a high customer lifetime value (CLV), it indicates that you have built up brand loyalty and will continue to have recurring income from your present clients even when the economy is in a downturn. They will not only keep buying from you, but they will also talk positively about your brand to their friends and family.
- Daniel Foley, Founder of Daniel Foley SEO Consultancy
4. Maintain a Slender and Flexible Body
Maintaining an adaptable mentality is essential if you want your company to survive the current economic downturn. Do not allow yourself to be anchored to old plans by either tradition or ego, especially when the capacity to swiftly pivot might provide you an advantage over businesses that move more slowly.
Additionally, try to secure flexibility from both your customers and your suppliers. Contracts should be renegotiated to include conditions that are more advantageous and might boost cash flow. Cast aside any unnecessary luxuries, such as obsolete tools, which may have made sense during more prosperous times but are no longer required for the proper functioning of a firm.
- Patrick Johnson, Owner of C&H Essentials
5. Maintain a positive standing in the eyes of your creditors
Do not put off paying payments to your creditors if it is at all possible to avoid doing so. You may be under the impression that postponing payments to your creditors would result in you having more cash in the bank.
Having a limited amount of money, on the other hand, may cause this method to fail. It is in your best interest to keep a positive relationship with your creditors while also making timely payments on your obligations. If you have a history of paying your bills on time, it will be easier for you to negotiate better terms with your creditors if you find yourself in a difficult financial situation in the future.
- Aimi Davis
6. Enhancing the Number of Repeat Customers
Because the level of pleasure that a company's customers report is the single most important element in determining that company's level of profitability, it should go without saying that a company should strive to provide its customers with exceptional service.
Your company will always be future-proofed, regardless of the challenges you face, providing your customers a loyal attachment to the services you provide and continue coming back to you time and time again. However, making this into an actual reality entails taking a long hard look at your present client retention techniques and finding areas for improvement.
- Sasha Quail, Business Development Manager of Claims.co.uk
7. Commit to Building Solid Relationships
Relationships take on an even greater significance during times of economic instability. If you have established trustworthy connections with your landlord and your vendors, it will be much simpler for you to postpone a rent payment or extend the period over which you pay a vendor.
You should make an effort to build relationships with people you can turn to for assistance before you need it. Building meaningful connections with your clientele is critical to business success. Solidifying connections during good times will help you retain them when times are rough. In the end, individuals do business with companies that they are familiar with and trust.
- Frederic Linfjärd, Director of Growth Marketing at Planday
8. Strategic and Tactical Marketing and Sales
When there is a downturn in the economy, a lot of small businesses make the mistake of stopping all of their marketing operations. On the other hand, the cost reductions in the near term come at the sacrifice of developing a robust lead and sales funnel for the longer run.
Maintaining your sales and marketing operations during a slowdown may also help you gain market share when competitors reduce their spending, which is why you should keep such activities going. For example, if you sell clothes, you should learn strategies - how to start a clothing brand.
Examine your budget to see where you are getting the most return on investment rather than deciding to scrap all of your marketing efforts.
- Megan Young, Marketing Manager at MCS Rental Software
9. Establish several other revenue streams
During times of upheaval, the key revenue source that your company relies on upon could not function as efficiently. Because of this, a firm needs to diversify its sources of revenue for it to prosper even when the economy is in a downturn.
During the COVID-19 shutdown, for example, it's possible that running a business in a physical store wouldn't have been possible for you. Therefore, to ensure the continued success of your company if a situation like the one described above arises in the future, you should provide your clients with the choice to buy from you online or with pick-up services.
- Adam Crossling, Marketing Manager at Zenzero
10. Under Promise and Over Deliver
Delivering outstanding customer service is the most effective strategy for combating the economic downturn. If you do a good job and your clients love working with you, they will become an unpaid sales force for your company because of the positive experience they had. It shows that you care if you perform a good job, reply quickly to complaints, make follow-up calls, write thank-you letters, and provide tiny extras.
You may also show that you care by including minor extras. It is also a great strategy for getting your customers to recommend your business to other people. Build a name for yourself in the industry by delivering outstanding services.
- Nely Mihaylova, Content Editor at UNAGI Scooters
All of a small business's attention and resources should be directed toward cultivating a committed client base. They should spend the next several months going above and above for their clients, creating connections, and making sure they have repeat customers so that they are prepared for a recession.
This may be accomplished by businesses by cultivating personal ties with their clientele and even facilitating payment arrangements for their customers if the customers require financial assistance. If enterprises prepare themselves in this manner, they will be able to maintain their current levels of profitability even if the predicted economic downturn materializes.
Once a company's top executives realize they are in a recession, they may believe it is too late to take any actions that are more significant than just cutting expenses. A company needs to start preparing for a recession a very long time before the actual onset of the economic downturn. If managers are not adequately prepared for a crisis, it is best to approach recession-proofing in a method that is thoughtful and measured in order to reduce the likelihood of making mistakes, which are more likely to occur in such situations.
Additional resource: Creative business ideas
It is necessary to strike a balance between aggressively decreasing costs, effectively marketing to customers, and making strategic investments. Consider putting these 10 recession-proofing measures to use so that your business can not only make it through an economic downturn but even grow.