Recessions can hit all kinds of businesses, no matter their size or income, and they can be difficult to avoid altogether. But there are steps you can take to reduce the effects of a recession on your business and protect it against downturns in your market as much as possible. These steps will help you prepare your small business for both short-term recessions, which usually last six months or less, and long-term recessions, which usually last more than six months. They’ll also help you prevent future recessions from damaging your business in the first place.
Are we heading into a global recession?
If the headlines are to be believed, it is definitely a possibility.
“The Bank of England has not technically predicted a recession. However, it expects a huge downturn towards the end of the year, with a contraction of almost 1 per cent between October and December.”
“The numbers show the U.S. economy is at least teetering on a recession.” “The White House is sure the economy is not in a recession nor headed for one. Wall Street is pretty sure there is no recession now, but isn’t as positive about what’s ahead.”
“Australia risks recession and housing downturn after third rate hike. The negative impact of interest rate rises on Australian house prices, household spending and the volume of dwelling investments may hurt consumer confidence and fuel the likelihood of a recession in Australia”, analysts and economists say.
“New Zealand will enter a recession next year that could be deeper than expected”, Bank of New Zealand economists said after a survey showed business sentiment continues to slump.
“Is Canada in recession?: We still view a soft landing as the most likely outcome for the economy, but we estimate the probability of a recession over the next 12 months has risen to about 40 per cent.”
Long-Term Prep
Though you can’t predict when a recession will hit, and many experts don’t even seem to agree, what you can do is take steps now to help insulate your business from its effects. Start by building up your cash reserves—aim for enough to cover three to six months of operating expenses. Then, review your debt obligations and see if there’s any way to restructure or refinance them to make them more manageable. Finally, take a close look at your customer base and see if there are any segments that may be particularly vulnerable during an economic downturn. You might want to focus on marketing strategies aimed at those groups, like offering payment plans or discounts.
The Effect of Rising Prices
In recent years, the cost of living has been on the rise. This is due in part to inflation, but also because the cost of essential items like food and gas have increased. As a result, many people are struggling to make ends meet. To prepare your small business for this eventuality, it’s important to monitor any changes in pricing levels and adjust your prices accordingly. For example, if you see that there’s an increase in demand for your product as well as a corresponding increase in price, then you may want to consider raising your prices too.
You’ll also need to keep up with changes in wage rates; if the average wage goes up, then you’ll need to change your prices accordingly. Likewise if the cost of delivering your services has increased, then you will only survive if you cover that increase with a rise in your own prices.
With these factors taken into account, you should be able to take measures ahead of time so that when (or even before) a recession hits, your small business will be ready!
Reaching Out to Customers
Even if your business is doing well, it’s important to stay in touch with your customers during a recession. Let them know you’re still there for them and offer any discounts or specials you may have. You can also use this time to build relationships with new potential customers. You may even want to try something new like email marketing that doesn’t cost as much as other forms of advertising. Keep yourself at the top of your game. Make sure your staff stays up-to-date on the latest trends in their fields. When people have less disposable income they are more choosy about how they spend their money, so make sure your service is a necessity, but one that they consider to still be delivering in terms of service and quality.
Service Through Difficult Times
The effects of a recession can be felt by businesses of all sizes, but small businesses are often hit the hardest. As we enter into an uncertain economic time, it’s more important than ever to make sure your small business is prepared. Here are some tips on how you can weather the storm. -Maintain cash flow: You should have three months’ worth of operating expenses saved up at all times.
-Watch your balance sheet: If you’re in the red, focus on generating revenue instead of spending money. -Don’t borrow too much: Debt payments are typically one of the first things that get slashed during a recession, so avoid using too much credit to keep afloat.
-Make a plan – review your most profitable services and best clients using Savvy’s reports. Tailor your send to all marketing and marketing newsletters in Savvy to promote the most profitable services and to look after your best clients.
– Work efficiently – dont waste time on paperwork or texting reminders when Savvy will do this for you. Spend that time on growing your business or taking on more of your target clients.
– Use Savvy to fill your diary NOW with online booking, repeat appointments and long term scheduling to make sure your diary is full for 2023 before any downturn happens.
Digital Marketing During an Economic Downturn
While it may be tempting to cut back on your marketing during a recession, this is actually the time when you need it the most. By investing in digital marketing, you can reach more customers at a lower cost, and stay top-of-mind when they’re ready to buy. Here are three things you should do to prepare:
1) Continuously research your competition so that you have a good idea of who they are and what they offer. 2) Look into how other companies have adapted their marketing strategy during economic downturns; one study found that companies that increased their spending on advertising were able to grow profits by as much as 25%. And 3) Give all employees responsibility for maintaining social media accounts so that there’s no lapse in customer service.
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