How to Thrive in a Recession
There's no doubt we are currently experiencing difficult economic times. Rising inflation, high interest rates, soaring gas prices and geopolitical instability have been the defining events of this year. It almost seems like with every year there's always some negative problem. It seems almost confusing because the labor market looks positive and unemployment has fallen. Now, your hear the Fed is trying to engineer a soft landing to prevent high inflation from getting out of hand.
If you are a small business owner, you are probably already frustrated and helpless. You may be wondering how you can overcome these tough times and start generating more customers and revenue for your business. Now, there's a possible economic recession on the horizon because the Fed might pump the breaks on rising inflation by raising interest rates.
It's difficult to stay positive when the media is full of negative news coverage about the economy. Also, there are going to be fearful people around you whether it be your colleagues, your friends, people at your local church, or people at your local grocery store who are saying it's going to be the great depression all over again and the stock market's going to crash. You may see businesses shutting their doors, downsizing, and people losing their jobs. Indeed, ordinary people and even economists on Wall Street have a bearish outlook. Did you know that in 8 in 10 small business owners think there's going to be a recession in 2022. It's easy to become fearful during these times.
When there's a decline in economic activity, you must do the opposite of what others do. You must know you can overcome these hard times with hard work. Nah, that's wrong. It's actually smart work with lots of effort. You can overcome any recession, depression, or economic contraction if you put time, effort, and spend time to think about how you can resolve an issue. Remember, it's important to shutter all the bad things and focus on how you can meet and exceed your targets ona regular basis. Here are some actions to take that can benefit you in the long term:
Make your customers a priority
To weather any economic storm, you need to make sure that your customers are happy. Customer retention is key for small businesses – in fact, a five percent increase in customer retention can lead to a 95 percent increase in profits.
Your loyal customers are the ones who will stick by you during tough times – so it’s important to give them extra attention. They know your product or service well and are more likely to give you repeat business. Not to mention, it costs six to seven times more to acquire a new customer than it does to retain an existing one.
So what can you do to keep your customers happy? First, make sure you’re providing them with what they need. This may mean being flexible and adapting to their changing needs. For example, during the Covid-19 pandemic, many companies had to pivot to meet the new demands of consumers. Wayfair, an online home furnishings retailer, saw a major uptick in sales for items such as couches, beds, and home office furniture as people were suddenly working from home full time. In response, the company offered more choices and unparalleled convenience – including free shipping on large items straight to customers’ doorsteps.
So if you’re feeling the pinch, make sure that your focus is on giving excellent customer service. If you keep your customers happy, they’ll stick with you through thick and thin. And remember: as their needs change, be sure to change with them.
Don’t stop marketing
While it’s important to be mindful of your spending during difficult economic times, eliminating your marketing budget entirely is a mistake. In fact, this is when your small business needs marketing the most. Having a quality, well-designed website is one of the biggest ambassadors to your brand and a crucial component of a brand's marketing and branding strategy. Guide potential customers to your products and services to get your brand out there. By showing them you have great products that address their problem(s), you’re doing them a service.
Here are some effective methods you can employ as part of your marketing arsenal:
Consistent Social Media Posts & Engagement: The key to social media marketing is consistency. Posting regularly (at least once a day) and responding to comments or questions quickly shows potential customers that you are engaged in your online presence and you care about them. Additionally, engaging with other users by liking and commenting on their posts shows you are interested in connecting with others in your industry.
Optimize Your Business for Local SEO: SEO is more important than ever for small businesses. In order to compete in today’s economy, it is essential to have a strong online presence and rank high on Google. Recession or not, consumers are searching for products and services online. If your business doesn’t show up in the search results, you are missing out on those potential customers.
Local SEO provides small businesses with a level playing field against larger businesses. You no longer need expensive brick-and-mortar locations or huge marketing budgets to reach your targets when you rank #1 on Google "near me" searches.
Many factors contribute to a strong SEO strategy, but here are a few key tips:
- Use keyword-rich titles and descriptions
- Create quality content that is relevant to your target audience
- Optimize your website for mobile devices
- Build backlinks from high-quality websites
SEO is not a one-time thing, it's an ongoing process. However, making even small changes to your website's SEO can have a huge impact on your business. If you are not sure where to start, there are many resources available such as Google Webmaster Central, SEMrush, Yoast, HubSpot Academy, and Search Engine Land to help you get started.
By following these tips, you can help ensure your website is optimized and your brand is in front of customers.
Have Different Communication Channels: It's important to have different social media channels, especially ones important to your niche. You want your brand to be able to communicate with a wide range of people. Tiktok, Facebook, Instagram, and Youtube are big ones. Depending on the industry, some businesses may want to use Pinterest or Snapchat. It's important to get good at one of them first. At Mac Digital, we advise you to focus on Facebook & Instagram first because they have the greatest reach and they are more predictable in getting results.
Produce Free & Valuable Content: This may sound counterintuitive but have you heard of the saying "the more you give to others, the more you'll get in return?" That's the case here. If you provide value for others, they will in turn provide you value in appreciation and support you. It's essential for small businesses to continuously produce free and valuable content such as blogs, podcasts, free webinars, videos, and ebooks. This will help them build trust with their target audience and establish themselves as thought leaders in their industry.
Attend As Many Networking Events As Possible: You should take advantage of networking events to market your business. Networking events provide opportunities for small business owners to meet potential customers and other business owners who can refer customers to your business. You can also learn about new products and services that could help your business and get advice from other entrepreneurs who've been through difficult times. When you have free time or need to take a break from exhaustive work, you should attend as many as you can.
Marketing is essential, especially during tough times, because it creates touchpoints for your business — opportunities for interaction between customer and company that can lead to sales — and provides valuable data about customer behavior, preferences, and trends that businesses can use to improve their products, services, and overall performance.
Focus on Core Competencies
When times are tough, small businesses need to focus on their core product or service. This is what you do better than anyone else, and this is really what your customers want from you. Everything else--- distraction. If you can hone in on this, you will be able to weather any storm.
Try creating multiple streams of income with your core products/services. For example, if you own a bakery, you could sell whole cakes, cake slices, cupcakes, muffins, etc. If you own a software company, you could offer subscription-based access, one-time purchase access, and consulting services. The possibilities are endless! Just be creative!
Protect Your Cash Flow
If there's one thing you ever learned in life, don't go negative. It is paramount to maintain positive cash flow during a recession. This means that you're bringing in more money than spending. A recession is often caused by a decrease in consumer spending, so small businesses need to focus on their cash flow during these times.
Here are a few options to consider:
Cut back on unnecessary spending: This doesn't mean that you should stop investing in your business altogether. You should, however, consider cutting back on non-essential expenses such as office parties, company cars, and unnecessary travel. Small businesses should also focus on reducing their inventory during a recession as this will help free up some extra cash reserves.
Renegotiate vendor agreements: One way to free up some extra cash flow is to renegotiate your vendor agreements. This could involve extending payment terms, getting a lower price for goods or services, or both. Small businesses should reach out to their vendors and see if they are willing to renegotiate their agreements. They may be willing to give you a more competitive price or more flexible payment term when the economy is rough.
Delegate and Automate
As a small business owner, you can't do everything yourself. Delegating tasks and responsibilities doesn't mean you're giving up control of your business. It just means that you're assigning tasks to people who are better equipped to handle them so you can free up time to focus on important things.
You should also automate as many processes as possible. Automation will help you improve efficiency and productivity while reducing costs. There are several areas in your business that you can automate, so choose a time-consuming task. For example, you can automate email marketing, payroll, social media posting, and outreach.
Don't give up
The most important thing to remember during hard times is to stay motivated. It's easy to get discouraged when you see other people around you struggling and being negative. A wise person once said, "When something is important enough, you do it even if the odds are not in your favor." That person was Elon Musk. He had his fair share of hard times, near-complete failure(s), and struggles. But if you give up, you will definitely fail. If what you do is important, you must persevere. While everyone else experiences a significant decline in economic activity, you do more. So keep moving forward, no matter how difficult it gets because this is temporary.