It’s a scary time for business when the economy starts to grind to a halt.
But even in a slow economy, it doesn’t mean your business needs to slow down. On the contrary, an economic downturn can offer many unique opportunities to an ambitious enterprise with the right business strategy.
In this guide, we’ll offer a blueprint for growing your business when faced with a potential economic catastrophe.
We’ll show you precisely what your business can do to protect itself from the impending storm. We’ll also offer some suggestions on how you can intelligently pivot your business to thrive during an economic recession.
Keep on Top of Your Cash Flow
Cash flow is the leading cause of small business bankruptcies. According to the US Bank, 82% of small business failures cite cash flow as the most significant problem that led to their company closing.
There is an obvious takeaway here. If you want your business to survive an economic downturn, stay on top of your cash flow. Make cash flow your number one priority.
There are two proactive ways you can help keep your cash flow healthy. First, keep tabs on all spending, down to each line item. And second, get good at forecasting. See what money you have coming in and when.
If you need to hire someone to chase payments, the role will pay for itself if that person helps ensure you get paid on time.
Cut Unnecessary Expenses
During a downturn, it’s essential you take stock of your spending and look at notable areas where your business can start to cut back without impacting your profit.
Review your business’s expenses over the past 12 months and highlight any expenditure you can place on hold for a year, plus any spending you can reduce.
Here are some examples of areas that you might consider for cutbacks:
- Staff travel expenses: can you conduct meetings via video calls instead?
- Warehousing: check your inventory and see if you can reduce it
- Office: implement hot-desking and work from home policies
- Energy costs: can you make offices and buildings more energy efficient?
Where you cut costs will depend on your business. But this exercise will not only help you survive a downturn, but it’s also a sensible long-term way to boost your company’s profits.
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Maintain a Good Credit Rating
Getting a competitive rate on a business loan can significantly impact the long-term costs of that debt. And your business will need a solid credit rating to have access to the cheapest corporate loans.
So make it a priority to pay your debts on time and maintain an excellent credit rating.
You might not be able to foresee when you’ll need a business loan. But if you do apply for a loan, you’ll have the opportunity to get one at a rate that’s affordable for your company.
Look for Emerging Trends
A slow economy can equate to problems and challenges for businesses and individuals. But where there are challenges, there is a chance for your business to provide a solution.
In other words, an economic downturn is also an excellent opportunity to spot gaps in the market.
It’s also a time where you might be able to exploit emerging trends. At the same time, your competitors are busy battering down the hatches.
Start with a look at Google Trends to see what customers are paying attention to in the world. See if there is an opportunity for your business with a new product line or new marketing tactic.
Keep an eye on news within your industry. If you get an invitation to an exhibition or conference, book time to attend. They will help you spot trends.
Improve Your Email Marketing Efforts
If you haven’t built an email list for your business, now is the time to start.
An email list will give you direct marketing access to your potential customers. It will allow you to run a quick promotion or sale with the use of a single email. That is hugely valuable if you need an immediate revenue boost.
The easiest way to create an email list is to add an opt-in form to your website. If you have time, make a freebie that your customer leads can download in exchange for an email address (a free eBook in your niche is a good option).
When you begin to build your email list, draft some promotional email sequences for your audience. Think about time-limited offers that compel your audience to open your emails immediately and click on the link.
The more you build your email list, the better this list will be at supporting your business in a slow economy. Imagine having an audience of 1000 or more potential leads to tap into when you are short on sales.
Staff salaries are a considerable expense for every business. But not all of your company’s roles will require a dedicated, full-time, in-house staff member.
Identify roles in your organization that might be suitable for freelance, temporary or remote staff. By doing this, you’ll be able to cast a wider net to find the right talent at an affordable rate.
Take virtual assistant roles, for example. Many small businesses are finding value in employing remote assistants to help with day-to-day tasks. By looking Worldwide, you can get excellent support at a competitive hourly rate.
Freelancers and temporary workers might also be a sensible option, at least in the short term.
They will give you flexibility if your business is slow and you need to reduce your workforce. You’ll avoid the overheads that come with full-time permanent staff.
Narrow Your Supplier List
It might be time to contact your current suppliers and ask for a better price. Here are a few ways you can do that.
First, if you have upcoming contract renewals, it’s time to open up your supplier to competition. Ask your supplier for their best quote, or create a bidding process to open your custom to outsiders.
Second, see if there are purchases you can consolidate. By buying in bulk from one or two suppliers, you might be able to access discounted wholesale rates.
Third, if you have a long-standing relationship with a good supplier, ask if you can agree to a new, extended payment term.
That will give you longer to pay an invoice, which will help if you are experiencing a short-term drop in revenue or want to protect your cash flow.
Try PPC Advertising
Suppose you see a drop in revenue or a decline in new customers. In that case, it might be time to invest in advertising, even in a slow economy.
Remember that if other businesses are experiencing the same economic impact, there will be less competition for advertising space. Therefore, you’ll be able to tap into cheaper rates.
Focus on one PPC platform to start if you lack experience in advertising. That will help you discover what type of advertising performs well for your business before scaling your ads.
Create a promotional offer for your ads if you want to get a short-term revenue increase from your ad spend.
If, however, you see a significant drop in sales because of broader industry issues, use your advertising budget to grow your brand, and your customer leads.
When the market picks up, you can start promoting your business to these new leads and seeing a positive return on that ad spend.
Search for Financial Help
Suppose you are struggling financially to keep your business afloat during a recession. In that case, it might be time to consider government assistance.
Grants and government loans aren’t always an option, but it is worth your time to research to find any financial support available to your business.
To maximize your chance of receiving financial help, build your business case.
Put together financial information that demonstrates the long-term potential of your business and explain how broader economic impacts are putting your company’s future at risk.
Send Your Customers Some Love
Did you know that it costs the average business five times as much to win a new customer than secure a sale from an existing customer?
In other words, if you want to survive an economic slowdown, treat your current customers like gold dust.
Think about what you can offer to recent and loyal customers to show your appreciation? Maybe a loyalty scheme would show your thanks and also help boost sales.
Perhaps you can use corporate gifts to show your appreciation to those customers who spent the most with your business during the past twelve months.
You could even invite your most important customers to a corporate event to thank them in person and use that opportunity to build strong business relationships with your most valuable clients.
Follow Your Competitors
Perhaps a significant competitor of yours is thriving, even in a slow economy. In that case, it’s worth your time investigating what they are doing right and what you can learn from their efforts.
That isn’t about mimicking your competitors; merely about discovering new opportunities that you might have overlooked.
Perhaps there are small niches within your industry that are still seeing business growth, despite economic problems. Or maybe your competitor is finding success tapping into a different customer demographic.
Observe your competitors and learn from their successes. It will open you up to ideas and challenges that you might have dismissed in the past.
Revisit Your Business Strategy
An economic slowdown might be the perfect opportunity to take stock and revisit your business strategy.
Times change and your old strategy might no longer be the best direction for your future business growth. Successful startups need an adaptable, up-to-date business strategy.
If you can afford it, seek outside expertise. Sometimes, it takes an outsider’s eye to spot issues and opportunities that someone inside your business is too busy to notice.
Up Your SEO Efforts
Ranking in the number 1 spot on Google for a relevant keyword is one of the best ways to make sure you are generating new customers and leads in the long term.
Even when an economy is slow, good search engine traffic can help keep you afloat when you genuinely need that custom.
If you don’t invest in SEO, make it your number 1 marketing priority from this point onwards. It takes time to see a result from good SEO practices, so the earlier you start, the better.
Don’t forget to use SEO to tap into emerging and growing niches within your industry. When the economy improves, you might find yourself in the top spot on Google to sweep up in these new marketing segments.
Good SEO practices take experience, so this is an excellent role to outsource if you don’t have someone in-house who understands how to rank a website on Google.
Don’t Forget to Innovate
Many businesses make the mistake of putting their foot on the breaks during a slowdown.
Sure, you might want to cut costs, and there might be sensible reasons for holding back some investments. But don’t let that caution extend to areas of your business where you innovate.
Innovation is at the heart of any successful business. And you never know. A new creation during a downturn might be your route out of a recession.
Put your best minds to work on new product development, and invest as much as possible in market research and product design.
Economic slowdown should never be an excuse for stopping growth in an innovative business with so much potential.
Run a Surprise Promotion
Creativity doesn’t have to be limited to product innovations. You can put those bright minds to great use by coming up with an inventive and unusual marketing promotion that will capture the attention of your target audience.
Consider a marketing promotion you haven’t tried in the past. That might be a heavy time-limited discount on your top product, or perhaps offer a limited-edition design on an existing product range.
You could even launch a competition, which will have the added benefit of helping you generate new business leads.
Keep Growing Your Business During a Downturn
With the right business strategy, your company can thrive, even during times of economic hardship. Take an optimistic, can-do attitude to any challenge, and you’ll prepare your business for any future, however adverse.
If you want more tips and strategies on growing your business in 2021, browse through our latest stories on our blog now.