Can businesses be successful during a recession? It may depend on what industry a company is in as, undeniably, there are some sectors which are more likely to make it out relatively unscathed. With a possible recession on our doorstep, is this a good time to panic, sell all our stock investments and start hoarding cash?
Recessions are a normal part of the economic cycle, and there is no need to panic just because an economic contraction might be on the horizon. While the prospects of such an event occurring have certainly increased, it is more difficult to justify clinging on to what does not work and yet more reason to reinvent something new.
In basic terms, a recession is when the economy’s performance deteriorates for an extended period of time, at least two quarters, and is marked by a GDP contraction, higher unemployment rates and lower consumer spending. It is wise to assume that few businesses are safe when it comes to a recession but, if strategic planning occurs ahead of time, more companies can survive and grow stronger as a result.
So we must ask: Can businesses remain sustainable during a recession? Here is a guide as to how companies can prepare to withstand the downturn.
During periods of economic contraction, investors may wish to prioritise portfolio diversification and avoid panic selling. Consider which products you can add to the line-up at minimal cost. This is an obvious one, but it is by no means a silver bullet solution, and nor is it sustainable. Research less expensive vendors or utilities, and cut non-essential technology costs. If possible, delay payables and collect receivables sooner. Ensure that you always have a steady and reliable cash flow.
Strengthen and prepare customer relationships
During a recession, a loyal customer can be among a company’s biggest assets. Building customer communication via social media, and a survey encouraging them to provide feedback on products and services, is essential. This will not only help to sustain relationships but also ascertain their needs.
Furthermore, during a recession consumers become more selective on spending. As an added incentive, develop a unique selling proposition by launching a loyalty programme that rewards long-serving customers or offers flexible payment options.
Pay attention to competitors
During a recession, it is wise to pay attention to your competitors. If they are cutting back on their marketing strategies, this presents an opportunity for your business to get ahead. The goal is to nurture the existing customer base and reach out to existing clients or customers. If they are nurtured in a difficult time, they are more likely to remain loyal.
Do not use a recession as an opportunity to rebrand or make any significant changes to your company name or business model, as it will likely complicate matters, which may result in a decline in sales. Stay consistent.
Support the employees you are retaining
A recession naturally provokes anxiety and fear, especially if employees are being furloughed or laid off. Letting go of your worst-performing employees may be unavoidable nonetheless, but build morale with your staff despite what is happening within the business. Try to involve them in the decision-making process so they can feel included as part of the solution.
Assess the health of your business. Readjust your products and services, and the resources required, as necessary as every business has a product, service or area in which they shine. A recession is usually the time to refocus and reinvent those core competencies that have been tried and tested.
Be ready for opportunities
It is not all doom and gloom. Market disruption can birth opportunities that may be able to rescue a bad situation. Always keep the lines of communication open, network and build relationships. Keep your ears open, your eyes peeled and think outside the box to identify opportunities.
To this end, recessions do not last forever. Your main goal should be to tighten your belt and remain focused until it passes. However, it is important to continue marketing your businessso as not to jeopardise a long-term investment. Until we meet again, fill your life with memories rather than regrets. Enjoy life and stay on top of your game.
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ABOUT COLUMNIST: Deidre M. Bastian is a professionally-trained Graphic Designer/Brand Marketing Analyst, Author and Certified Life Coach