The Impact of Recession on Small Businesses.

Economists are buzzing about the threat of an impending recession. Their concerns aren’t unfounded. The Federal Reserve cut interest rates this summer for the first time since the 2008 financial crisis, and yield on the 10-year Treasury note dropped below the two-year yield several times in August.

That’s not to say a recession is a given. Many economists see signs for optimism — most notably, consumer confidence remains strong and unemployment low. 

From protecting cash flow to building the customer base, implementing a few practices in advance can help recession-proof  business so it survives and even thrives during economic downturns.

  • 1. Marketing strategies

Reviewing  marketing strategies can help business come up with new ideas to increase sales and find better ways of using  marketing dollars. Business should focus on communicating competitive advantage.

The unique selling proposition should also assist businesses to stand out from the crowd. Alongside this, it’s important to develop strategies to measure the effectiveness of marketing.

  • 2. Assess the business’s health

In the months leading up to a recession, consumer spending and available capital can both decline, which can cause a business to feel a pinch in their budgets.

This means some difficult decisions may have to be made regarding product pricing, marketing initiatives, hiring, benefits and even new launches. 

  • 3. Networking.

Networking during an economic downturn can be useful to understand how other businesses are coping. Businesses may also discover new opportunities, customers, staff, suppliers, and business partners with minimal cost to the business.

Consider forming alliances with other business, for example, by offering complementary services and discounts.

  • 4. Focus on core competencies

The clients’ businesses have something they are really good at. It’s most likely their core product or service. And, that’s what will carry them business through a recession.

There are times to pour efforts into a new path with an unknown return on investment. Sometimes the biggest risks lead to the biggest rewards. But, a recession isn’t one of those times.

  • 5. Protect cash flow

Recessions lead to slimmer profit margins; which can make maintaining a healthy cash flow tricky. So, let’s get uncomfortably real for a minute. If the cash flow dries up, that’s likely the end of your business. So, to survive a recession, it’s essential to plan ahead for ways to cushion  cash flow.

  • 6. Build up employee skills.

Business need to rely on its team to help the business stay flexible, pivot, and think creatively during a recession, so it’s important that employees are in prime shape to meet these challenges.

Building up skills and cross-training staff can help achieve that end. As a practical matter, investing in employees can help them feel more connected to the business and more willing to go the extra mile when they are called on to do so.

  • 7. Track marketing key performance indicators (KPIs).

It’s critical to track marketing results and continue to monitor marketing KPIs. Only campaigns that are achieving their desired results should continue; those that aren’t should be stopped. 

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x