It’s natural to worry about what’s coming, especially when there’s recession talk. With these tips, you can prepare your business for a recession—without sacrificing growth.
What Is a Good Growth Rate for a Small Business?
Before we dive into how to prepare for a recession, let’s discuss growth. We subscribe to organic growth vs a specific annual percentage of growth for small businesses. The good news is that even during a recession, you can still grow your business—if you’re prepared for an economic downturn.
Preparing Your Business for a Recession
Studies show small businesses that prepared for the recession in 2009 had a 17% compound annual growth rate compared to their unprepared counterparts. Here are a few tips to help make sure your small business not only survives, but thrives during a recession:
Diversify Your Revenue Streams
Diversifying your income streams can help your small business remain profitable and resilient during unfavorable economic times. The key is to find creative ways to avoid relying on just one or two sources of income. For example, if you own a restaurant, you could start offering catering or meal prep services. If you sell products online, you could start offering a subscription-based service. That way, if one area of your business slows down, you have other areas to rely on.
Build Up Your Cash Reserves
You should also have a cushion of cash on-hand to prepare your business for a recession. It’s a good rule of thumb to set aside six to 12 months of operating expenses to get through difficult periods. It’s also a good idea to find ways to maximize profitability, such as double checking bills, analyzing your pricing strategy, and focusing on tasks that drive growth and profit.
During recessionary periods, customers become more price conscious, so it’s important to be willing to change your products, services, or pricing if necessary. Consider offering lower-priced alternatives, bundling services, or introducing new products that cater to a different market. Offering discounts or seasonal promotions not only helps you sustain growth during a recession, but it can also attract new customers and retain existing ones.
Tighten Your Belt
If revenue drops, don’t be afraid to cut costs where possible. However, it’s important to tighten your spending in a smart, strategic way that doesn’t compromise the integrity of your offerings. For example, start by looking into ways to reduce your overhead costs such as rent, utilities, or advertising. Utilizing tools and services, such as cloud computing, e-commerce platforms, and payment processing services, can also help reduce costs by eliminating the need for in-house staff or expensive hardware.
If your employees are faced with long workdays, tight deadlines, and constant change, it may be time to encourage your small business team to recommit to your company.
Cost-Effective Business Strategies During a Recession
As the world faces a recession, you might be worried about your budget, but don’t worry—there are plenty of ways to cut costs and still have a successful business strategy during a recession.
Use Cost-Effective Strategies
Many businesses think that expensive advertising campaigns are the only way to bring in new customers, but that’s not true. Using online marketing to reach potential customers is one of the most cost-effective strategies around. Social media platforms, such as Facebook and Twitter, are great places to start. You can also use online advertising services like Google Adwords or Bing Ads to get your message out there. Providing repeat customers with incentives for returning is also a cost-effective way to grow your business during a recession. Deals like loyalty programs and discounts help you keep existing customers and encourage others to become repeat customers.
Develop a Unique Selling Proposition
In times of economic recession, consumers are more wary about where they spend their money. To overcome this common sales challenge, start developing unique selling points that set you apart from the competition. Think about what makes your business different from the rest. What benefits do you offer that they don’t? Maybe you offer free deliveries, a loyalty program, or satisfaction guarantees. Whatever it is, make sure you communicate it to your sales team so that customers understand why they should choose your business.
Don’t Be Afraid to Ask for Help
Having a successful business during a recession can seem like a daunting task. You may be tempted to do everything yourself in an effort to cut costs, but that isn’t always the best strategy. To make the most of your marketing efforts, consider enlisting the help of professional copywriters and graphic designers to help you save time and money and improve your business’s visibility and profitability. Many professionals are willing to work at reduced rates during a recession, so you don’t have to worry about spending too much.
Prepare Your Business for a Recession at Our Next Growth Plan Workshop
At Inspire Results Business Coaching, we know that the key to growing your business during a recession is having a strategic plan in place. Our growth plan workshop gives you the tools and resources you need to develop a plan that ensures your business experiences growth during uncertain times.
In our fast-paced sessions, you’ll uncover the potential of your business by completing a Single Sheet Business Plan. Then, you’ll break your plan into quarterly, monthly, weekly, and daily goals to align daily tasks with your 10 to 30 year goal. By stepping out of your day-to-day business operations, you can get organized, complete a prescribed planning process, and walk away with an action plan that prepares your business for a recession.
Contact us today to learn more about our growth plan workshop.