Economic recession refers to a significant downturn of economic activities lasting for a prolonged period of time, usually months or years. This includes a decline in employment and production within a country’s borders.
One of the main causes of economic recession is a significant decline in expenditure. Usually, a country’s economy is said to be in a recession after it experiences two consecutive quarters of negative GDP.
So what is GDP? GDP or gross domestic product is the total monetary value of goods and services produced within a country during a specific period, usually a year or a quarter.
In most cases, scaling a business during a recession can be difficult, especially if it’s a new business. However, recessions don’t last forever, and there are ways you can get ahead of your competitors if it happens.
Let’s start with problems that can face your business during a recession before reviewing the solutions.
- Inefficient communication: Due to a lack of communication, your employees may waste time doing unnecessary work that can be avoided. An excellent example is looking for employees who can perform specific tasks.
- Insufficient support for remote work: With the advent of technology, most companies’ tasks can be done from home, which could translate to fewer office expenses and more productivity for better results. However, many businesses are still stuck with traditional work cultures.
- Data errors: Inaccurate data costs businesses in the US over $3 trillion annually. This is because most businesses don’t have their data centralized, which could lead to data duplication and opportunities for data entry errors.
Now let’s look at some of the strategies that can help you grow your business despite a recession:
Enhance Your Advertising and Marketing Efforts
This requires you to use more creative marketing techniques. Even if it means increasing your marketing budget, just do it. For instance, Starbucks enhanced its marketing techniques during the 2008 recession by launching the Golden Card reward program to improve the experience of its loyal customers.
Focus More on Your Loyal Customers
You need to put more focus on your customers during a recession because they are the ones that keep your business afloat. In that case, you need to make a list of challenges that may be facing your customers and tackle them quickly. Experts believe that a percentage of as low as 5% of customer retention can boost your company’s revenue by 25 to 95%.
You can begin by sending them personalized emails to show personal support. You can also offer discounts and provide extra services such as add-ons.
While still at customer support, don’t forget to cut off slow-paying customers, especially if you are running an e-commerce business. Then, you can substitute them with increased marketing efforts to attract new business opportunities.
Diversify Your Revenue Streams
Other investment opportunities different from your business might present themselves during a recession. This can be an excellent time to tap into them and expand your brand.
It can also be a great way of diversifying your revenue streams to ensure you don’t run dry if one business blows up. Also, remember to preserve your cash flow for at least six months to survive a recession.
Cut Unnecessary Costs
Don’t forget to cut unnecessary costs as you focus on better marketing strategies, offering better customer support, and diversifying your revenue streams. Try as much as possible to do things that won’t blow up your expenditure.
For instance, you can offer free services at the expense of your time. This includes charging for substantial goods at the current price and delivering them for free or at a favorable price.
Take Care of Your Employees
Employees are part of your most valuable asset in a business, especially during a recession. As such, you need to incentivize them to work harder during such an uncertainty.
However, don’t forget this is the time you need to cut unnecessary costs. In that case, you must ley off your worst-performing employees. After that, ensure you notify your reliable employee why you have done so and improve their working environment.
For instance, you can promise to keep their health insurance safe while improving their livelihoods during the recession period. This can guarantee a good future for your business.
Leverage Technology to Increase Efficiency
In order to compete during a recession, it is important that businesses become more efficient with their processes and operations. Leveraging technology is an effective way to do this.
Technology has the potential to reduce costs and improve efficiency in the short term, as well as help businesses become more profitable and competitive over the long term.
Technological solutions such as automation can streamline tasks such as order fulfillment and customer support. Automation can save on labor costs while providing a consistent level of quality service, which is particularly important when customers are looking for savings opportunities.
Cloud solutions are also an effective way to increase business efficiency as they allow you to access high-quality software without needing to invest in any hardware or software licenses.
Plus, cloud solutions can be scaled up quickly if needed, allowing your business to respond quickly to changing customer demand or expanding into new markets without too much capital investment upfront.
But technology isn’t just about tools – it’s also about people. Make sure you have the right staff in place with the skills necessary for leveraging technology solutions effectively, from hiring talented IT professionals who understand server architecture and app development, to recruiting digital marketers who know how to drive traffic through paid search ads or organic campaigns through SEO optimization.
The right staff can be key for embracing digital disruption and preparing your business for new opportunities during a recession – so don’t overlook this important factor when it comes to scaling your business during economic turbulence.
Although recessions can bring uncertainties and challenges to your business, you can still scale it to greater heights with the right mindset and strategies. In that case, you can leverage the above tips to continue growing your business during a recession period.
If you have any questions about your brand, you can contact a financial advisor to ensure you make informed decisions.