Smart growth strategies to help your business sail through a recession

Economists may have different opinions about the growth of the global economy. However, one thing that all of them agree on is that a recession is on its way. With COVID-19 raging and the entire world being locked down under the threats of a global pandemic, the economic revolution has already taken a plunge. This is when it is essential to be ready with strategies to cope with the ongoing situation.

Businesses must implement full-fledged strategies to face any possible situations in an economic downturn. You should take advantage of the tail end of a good economy while it lasts. The expansion sector is currently quite vulnerable and will take another year or two to give you a valuable growth window. It is crucial to understand that the more progress your company makes during that time, the more significant your cushion will be when the markets start dipping again.

You do not have a crystal ball that predicts the future accurately. So, in this case, the only solution would be to invest in ways to protect your business and benefit you in the long run.

Risk/Reward

Investments are subjected to all kinds of risks. One strategy to raise revenue might be to increase your sales staff so you can start a new service line. However, you need to understand that this might also burn your business, so do your research carefully before embarking on such a risky venture. There are still a few measures that offer both worlds the best to help your business grow and protect itself in the long run.

Focus on customer retention

When a recession strikes, you have a significant chance of seeing your customer base shrink along with the economy. Keeping this in mind, you will have to come up with the best protection plan for your business. However, you need also so to make sure to consider the cost-benefit breakdown of such acquisition and retention. Typically if you improve retention by just by the present, you can have an enhanced profit of about 25% to 95%. So this means that your best bet will be to strengthen your current customer base. It is a more economically sound proposition to improve your existing customer relationships, than it is to acquire new ones.

There are a few fantastic, low-cost ways to ramp up retention.

Personalized service

You can try personalizing your emails and create informative content to keep your users engaged and gain maximum benefits from your products. You can also have your customer service staff reach out to customers who have taken long-term services contracts or are less likely to cut ties when situations are adverse.

Offering servicing

Most of your customers will solve their product issues on their own. However, that does not imply that they will not need expert help sometimes to deal with specific challenges. Despite that fact, 75% of consumers would want some sort of self-assistance when they get stuck with a product or service problem.

As vendors, you need to provide your customers with what they want. This will improve your customer experience and help your staff free themselves from petty or minor issues and quickly and comfortably address the trickiest matters. As soon as the recession kicks in, you will have lesser salaries to pay, and your customers will get more time to learn the tricks of self-servicing.

If you want to get the nitty-gritty of self-service right, you need to understand your work model well. You can establish smart servicing kiosks rather than a brick and mortar business. You can even install chat-bots to handle some of the queries online or over the phone. You can update your blogs with different troubleshooting contents to fill the gap between the abilities of chat-bots and solving complex issues that require proper human attention.

Perfecting your core products

Recession can quickly destroy the spines of an economy. Business leaders and economists are the right people to forecast such an occasion, and often react by trying to get a foothold and expanding into new markets when they see a recession on the horizon. Nobody can ever predict the future of the market or which market will suffer the most. This is why many entrepreneurs and business experts try to establish themselves in as many different horizons possible.

If you want to understand the flaws inherent in this model, research the market and see how the major technology companies have fared in the last recession. Recessions aren't a gimmick. If you look at Microsoft's numbers for the last financial quarter, you would understand that a company of that stature that has established itself into everything starting from offsite service to tablets and gaming systems was also forced to cut slack on thousands of its employees worldwide. However, if we look at Apple's sales, we would see an upward inclination in the charts as it stayed committed to its production of Mac, iPod and iPhone.

This is why experts would always advise you to iron out your wrinkles in what you do best, rather than spreading yourself and making your chances thinner. Focus on getting regular customer feedback through surveys and such focus groups so that you can redirect it to your R&D efforts and enhance your services and product line. If you do not have much to spend, you can focus on the interface and your strengths. Providing your customers with an easy-to-use and sleeker product would be a cost-effective approach to enhancing customer experience.

Proving your loyalty

If your business shows signs of a slowdown, your employees will start worrying that they have boarded a sinking ship. Although trying to increase the paychecks of your employees during a recession period is not usually the right decision, you need to understand that it sends a powerful signal to the employees about your company's stability.

As an efficient leader, you should always remind the team members that recessions are temporary, and this too shall pass. For example, you can provide the employees an across-the-board bump in their pay, especially to the long-term employees who have been there with your team for at least three to five years. If you consider a fair profit share, you should also keep in mind that you have to consider increasing the percentage of profits to be shared every year of your employee's tenure.

It is extremely crucial to invest rightfully on your employees to gain a better return on investments. Such investments are better than any other sort of spending and have been studied across industries. While spending on the company's revenues for capital improvement will have enhanced productivity by about 4%, the same amount spent on employee capital will improve your average productivity and revenues by 8.5 %.

Strengthening supplier relationships

Recessions create many cascades. Even if your supplier seems to be in a financially stable place at that point in time, you cannot know the future of the market when it begins to fail. A simple example: everyone needs food to sustain themselves; however, the food distribution services will still be susceptible to the year's dips of agricultural production.

It is crucial to keep reviewing your supply chain and ensure that you have a backup plan if your primary supplier goes out of business, temporarily or permanently. For the rest of the suppliers, you need to put together a plan of action to cater to shortfalls of any kind. If you are dealing with a print supplier, for example, you need to understand if you can work with the digital documents in most cases and if a refill ink cartridge is required.

You should always keep in mind that building a great rapport with every vendor goes a long way. If a vendor cannot fulfill all of its orders, they will choose exactly how much they can satisfy. In such scenarios, a personal relationship will go a long way and give you preference over others in terms of flawless services. At times a simple happy birthday email or just holiday gift can do wonders to enhance the relationship with your vendors. This will also help you resolve your vendor issues, avoid future conflicts, and create a positive and fruitful working environment.

Making marketing more scalable

Marketing is one of the major areas that get a cut during lean times. While it is better to reduce promotional expenses during a recession than to cut them completely, you can always plan your budget accordingly. The real issue arises when companies let their marketing expenses get bloated and do not have a way to recover for those unwanted expenses.

Experts suggest that instead of investing in such questionable tactics until you are exhausted with your reserves, you can shift your focus towards spending in a scalable and efficient method. Email marketing does wonders for most companies. So if you have a campaign drafted, you can scale it up to collect more email addresses from clients.

Online marketing is a good bet during the time of recession. You can not only research a product but also get thorough guidance on when and where to start. Google and search engine optimization is a smart investment, and so is social media optimization. It costs practically nothing to update your Facebook page irrespective of the number of consumers who see it.

Banking upon your contractors

Recessions are events that, even if you do everything right, the reality will be hard to face. If possible, you should keep all your employees on board. However, there are chances that you have to cut down up to 70% of your labor costs to meet the typical expenses during these times.

Make a list of your business activities that can easily be outsourced. You can check out for such sites where there are multiple service providers and what they charge. There will be fair chances that you will have to hire freelancers for the purpose and pay them more than what you used to for a traditional employee; it will save you money in terms of employee payroll taxes and other benefits though.

If you are lucky enough, you do not need to cut your staff but build an auxiliary team. You can then use them alongside your core team's capacity to get the work done during tight situations.

While on the one hand, companies forget to maintain relationships with their contractors and search freelancers. They have to understand that keeping links such as commissioning a nice to have a blog post or website updates from time to time will go a long way to meet their requirements during lean times. This will enhance the company's productivity and keep track of its brand and act as a second plan of action when you will not be able to retain your substantial number of employees.

In conclusion

Like it or not, neither you nor your company can control the economy and market. It can tank tomorrow despite all the higher prices and the right scenarios. The market lives under the threat of volatility, especially during the times of a Global Pandemic. This is why you need to be prepared with all your forces to combat the uncertainty of the economy and global downturn. You need to understand that you are not at the mercy of economic uncertainty or the market and make yourself strong enough to cater to any situation. You can come out stronger from a recession as well. All you need to do is stay lean and invest wisely in every venture.