How to prepare your business for a possible recession
It’s the word that’s on the tip of everyone’s tongues: recession. Is one looming in 2022? In May, a Bloomberg survey of economists found there’s a 30% probability of a recession coming in the next 12 months. With the stock market’s recent dips and back-to-back interest rate hikes in the name of fighting inflation, many speculate it might be enough to cause the economy to falter sooner rather than later.
While it’s normal to feel uneasy about the warning signs of a recession – especially if you own your own business – it’s not all doom and gloom. Over the last two years, the market has seen unprecedented success and is ripe for a correction. Interest rates can’t stay at their pandemic lows forever and are still lower than in recent pre-pandemic times (think 2018). The current frenzy brings a well-known quote to mind, “There’s nothing new under the sun.” And it’s true. If we take a look at history and then take the necessary steps to protect ourselves, we should be able to weather the storm and come out of it even stronger than before (hopefully).
If you’re feeling overwhelmed, focus on what you can control. Here are some measures you can take to help brace your business for a possible recession.
Focus on the major priorities
The world is changing by the second. You’ll want to start by taking a good look at your business model and revisiting any assumptions you had built in about the economy (and how prosperous it was). Take some time to look at your gross and net margins, sales, digital marketing channels, and the markets you operate in and evaluate any risk to your customer base.
If this seems like a lot of work, don’t feel the need to take it all on your own. Pull in the people you trust the most at your company to aid in decision-making because they may be aware of things you aren’t. Once you’ve completed this practice, you’ll have a better understanding of what your priorities need to be for the coming quarter and year ahead.
Double down if it’s working, and pivot if it’s not
When you’re clear on your priorities and what needs to happen for your business to succeed, you’ll be able to see with greater clarity what’s working well and what isn’t. It could be the perfect time to realign with your core business, double down, and do what you do even better.
If, in the process, you identify any streams of business that are time sucks and unfortunately don’t yield the profits needed to justify them adequately, pivot to focus on the high-margin products and services that do. Remember: a pivot does not need to be a daunting overhaul. It can be more of a slight readjustment of priorities that will benefit your customers and business.
Step away from traditional marketing strategy
In periods of prosperity, a mistake we often make as marketers is failing to remember that increasing sales and brand recognition may be tied to things other than our clever copy and out-of-home ad campaigns. Purchases ultimately depend on customers having disposable income and a booming economy to support a consumption-oriented lifestyle.
So, in times of recession, when folks are losing their jobs and dipping into their hard-earned savings, a shift in mentality may be required in order to step away from traditional marketing strategy. It may not be the best time to do a full transit takeover promoting a splashy, frivolous product. That said, many businesses (wrongly) slash their marketing budgets to avoid layoffs, which isn’t the best approach, either.
Focus on pivoting your marketing strategy by stepping away from things that eat up your budget and place your efforts (and ad dollars) where you can see greater returns, i.e. in digital marketing and educational activities that genuinely benefit your customer when they need it most.
See the positives
As mentioned above, no one wants to lay off anyone, and no one wants to be laid off – period. But, tough times provide the imperative to cut sub-par performers and eliminate activities that simply aren’t working for your business.
Letting people go is never easy, and hopefully, you won’t need to. But, when survival is at stake, it’s much easier to get company-wide buy-in for reenvisioning marketing strategies, and a positive outlook can help motivate the team. Managers can switch up their mindsets to foster creativity. Got a blue-sky idea that just might make sense for the times? Bring it up, defend it and see what happens. But be prepared to determine where spending should be cut, where it should remain the same, and in some cases, what new ideas are worthy of adequate funding.
Utilize social media – it’s free
If a recession is looming, your digital marketing tactics are more critical now than ever. And one of those tactics is your social media presence. With the cost of search and paid ads equalling less bang for your buck, you could try tapping into your organic social media strategy.
The great thing about social media is it’s free. You can start by looking at businesses doing social media well and researching what hashtags to use and what communities to follow to target your specific audience. Set goals for yourself: do you want more followers? More social reach? Or more brand recognition? Then, tailor your social media marketing activities to meet your goal.
Focus on content that helps and educates your customers for maximum sharability. Social media certainly requires some effort, but it doesn’t need to be serious all the time, and the key is to remember: it’s not all about you. In fact, creating aesthetically pleasing, helpful content without sales goals attached to uplift others can do wonders for your brand – especially in challenging times.
With the pandemic woes finally behind us, many of us have started to return to work – just in time to be potentially hit with a global recession. While many of us found our back-to-the-office groove, others didn’t have an office to return to at all.
There are endless pros and cons of remote work, and we’re sure you’re a little tired of hearing about them or why hybrid is the best option. But at the end of the day, and regardless of how much you collaborate in-person and online, an office is still an expense you’ll need to allocate budget towards. If only 20% of your team utilizes your office regularly, it could be time to opt for a smaller space or do away with it (at least for now) to cut costs.
The bottom line
We hope the possible recession is just that – a possible one. But in times of economic uncertainty, it’s paramount to keep your customer top of mind, always. They are not nameless consumers adding to your bottom line, and they don’t deserve to be treated as such. Staying grounded, shifting your mentality, and doing what’s best for the customer will give you a great foundation to weather whatever is to come.
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