Business Survival Tactics in Times of Uncertainty
If there’s one word to describe the business climate as we move into the new year, that word would be UNCERTAINTY.
We’ve watched interest rates increase, businesses lay off employees, rising costs, worldwide tension, and more. It’s at the point where we’re almost afraid to ask, “What’s next?”
As I’ve talked with business owners, I’m seeing they are nervous about the economic outlook and not sure what changes, if any, they should be implementing in their businesses.
To gain some perspective, I did some research about the last big recession experienced in the United States during the years 2007 – 2009. According to Harvard Business Review, of the 4,700 public companies they studied, 17 percent did not survive the recession. That’s almost 1 in 5 businesses that suffered greatly during that recession.
Thankfully, none of the business clients I worked with during 2007 – 2009 had to close. I do, however, recall the concern and the varied responses from business owners as they moved through the recession.
Based on my clients’ experiences through the last big recession, I recommend 4 ways to keep your business afloat and even grow your business during a recession:
1 || Don’t panic
A knee-jerk reaction almost always results in a poor decision.
The personality of many entrepreneurs is to move quickly and seize the moment before it’s gone. While this personality can help a business grow quickly in times of economic stability, the quick-acting entrepreneur may make a fast decision with negative consequences affecting the viability of the business.
To slow things down, take a deep breath, spend at least a few days considering the next move, and reach out to a trusted advisor or mentor for advice. It’s important to gain perspective and create a defined plan to move forward.
2 || Rationally cut expenses
Making big cuts in expenses may not give the results you want.
Most small and medium-sized businesses are already running on a tight budget. Cutting out key employee wages, downsizing the workforce, or closing a location may put you in a position where it’s difficult to maintain the business going forward.
Instead of big spending cuts, focus on operational efficiencies like one of my service-provider clients. This business owner wanted to cut half of his employees to mitigate expenses as he believed the recession would quickly and significantly reduce the business revenue.
As I discussed the impact those cuts would have on his ability to provide services, greatly increase the hours he worked, and negatively affect employee morale, we decided to start with a bigger-picture review of the business operations, looking specifically for efficiencies.
After close review, he cut one employee position which could be easily absorbed by other employees, created a realistic budget for each sector of the business, and cut excessive travel expenses. By taking this approach, the business was able to operate in a lean fashion without turning the business upside down.
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3 || Invest in your business
Although this approach may seem counterintuitive, a recession can provide the perfect time to make your business stronger.
While working with a manufacturing company during the last recession, we discussed a key component to making their family business stronger. Because their product was made of steel, only certain shipping companies with semi-trucks could deliver the heavy product to wholesalers across the country. This model worked well until shipping companies began reducing their fleet and cutting employees in response to the recession, making it difficult for the manufacturing company to deliver its product.
My client seized the opportunity to buy semi-trucks at a reduced rate, become licensed for shipping, and increased its workforce to now deliver their own product and be self-reliant for the shipping process.
When other businesses are cutting back, it may be the time for your business to execute a well thought out business plan to create a stronger workforce, move into a different market, or buy assets such as equipment or real estate.
4 || Be strategic with marketing
Your marketing dollars need to produce results.
During a recession, companies tend to cut marketing costs when the reduction of marketing efforts may inadvertently cause the business to be more vulnerable.
Instead of automatically cutting marketing expenses when you’re facing economic challenges, consider working with a marketing expert to determine which marketing strategies and costs have the best return on investment. Strategically allocating marketing dollars in the best way can provide business stability or even growth during an economic downturn.
Create a competitive advantage.
While your competitors may freeze or pull back. Get the support you need to become innovative and grow. If you can learn how to thrive in times like these. Just imagine what your team will be able to achieve in the future.
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