It’s hard to escape the rumblings of an upcoming recession. Whether or not an economic change is headed our way, it’s always a good time to get prepared.
It’s hard to escape the rumblings of an upcoming recession. Fear around the yield-curve inversion, a standard tool used to predict recessions, is at an all-time high. However, many experts disagree with the current state of concern.
One factor that plays a significant role in economic growth is consumer spending, which is continuing to hold up well. Unemployment is at a near 50-year low, and wages are growing strong. All of which are signs that point to a more positive outlook than the one you might be seeing across news headlines.
Regardless, as a small business, it’s crucial to build an action plan that can react to economic changes. As Warren Buffet said, “Someone is sitting in the shade today because someone planted a tree a long time ago.” Whether or not a recession is headed our way in 2020, it’s always a good time to get prepared.
1. Focus on your competitive advantage
This isn’t to say that you should move away from diversifying your business – in fact, it can help to broaden your offerings and decrease risk.
However, during tough times, it’s good to re-focus on your core offerings. Breaking into new markets, even during a growth economy, can be risky and requires a strong focus on research and development. By putting the majority of your time and energy into core offerings, you’ll remain the best at what you already do well and maintain customer and client loyalty along the way.
2. Add new skills to your tool set
In tandem with staying competitive and highly skilled, it’s important to continue personal growth during a recession. Learning new strategies or tools that your competitors are using will allow you not just to maintain a client base but continue to expand it. Also, with all of the free affordable training tools online, such as Udemy and YouTube, it’s easier than ever to pick up new talent in your spare time.
3. Utilize technology
And what better skill to learn than a new technology that can improve everyday projects. Lots of software online is offered at little-to-no-cost and can increase the efficiency of old methods. A few examples of this is Canva, a free graphic design, and marketing tool, Basecamp, an affordable project management system, and Airtable for accounting or administration tasks.
4. Hold on to your best employees
During tough economic times, many companies are tempted to pull back on employee spending. After all, the unemployment rates tend to rise, increasing the pool of people you could hire if needed, right? The reality is that the cost of training new employees and losing customers due to the loss of your best employees is much higher. By staying focused on employee retention during an economic downturn, you prevent your competitors from poaching your top talent and losing business because of it.
5. Take special care of your customers
On the same note of retaining employees, your time and energy must be spent proving your value to existing customers and clients. Loyal customers are proven to be more affordable to maintain over obtaining new customers. Existing customers are also likely to recommend your business to friends and family as a form of marketing. Take special care of his customer base by making sure any customer support processes are well-oiled, and that all of your employees are trained on a customer-first mentality.
6. Secure new partnerships
You want to be first in line when a new opportunity arises. That’s why it’s key to continue networking on focusing on building new partnerships, both business and vendor-related. By teaming up with another company that may be going through similar issues during an economic downturn, you can support each other. With new partners, you can provide each other with resources such as cross-marketing to existing customers, or discounted goods and services.
7. Keep marketing
Marketing is one of the top items companies consider decreasing during changing economic times. It’s also the one most companies regret cutting when times are lean as it costs them market share in the long run. During a recession, consumers are still moving about and looking for new companies to turn to. If you’re not getting your name out there, and your competitors are, then you’re losing ground quickly. If you can’t afford an extensive marketing campaign, there are still lots of digital, low-cost alternatives to turn to such as email, blogging, and social media.