How do I grow my business in a recession?
With a pandemic in full swing and the threat of economic collapse looming, it can be difficult to know how to manage your business wisely. But while some businesses will choose to cut their losses in these tumultuous times, it’s quite possible for yours to prosper. That’s why, to help you prepare for any unpredictable changes, we’ve put together this helpful guide to surviving a recession. And even better, how to help your business grow.
Understanding the economy
Even in times of relative calm, the economy is constantly changing. That means it’s impossible to predict what the market will do and how businesses will need to respond. However, that is the very same reason that businesses can succeed and grow, so don’t fret. All you need to know is how to retain your valued customers, implement effective processes and eliminate wasted resources.
Invest in marketing and advertising
It might seem counterintuitive, but increasing your marketing budget could make all the difference for your bottom line. That’s because, as money gets tighter, your existing customer base will inevitably shrink and marketing is the only way to ensure you attract new ones. So without strategic marketing, your revenue is guaranteed to decline.
Good marketing encourages buyers to invest in a brand but it also builds relationships and trust between a brand and its customers. That’s why smart businesses will use it to demonstrate how reliable and helpful they are to their customers, who are likely feeling nervous about spending. Since most brands cut back on marketing, you can take advantage of more affordable channels and spend far less to reach more people with your message. It also sets you up well for when the economy recovers because you’ll have an engaged customer base who already has confidence in your brand.
Make staff adjustments
When approaching a recession, there are a few key things to do in regard to your employees. While a lot of companies will lay off the majority of their staff to cut costs, it’s often a mistake. So here’s all you need to know before making any hasty decisions:
Fire under-performing staff
Yes, there are some occasions where firing staff is necessary, but only in cases where they are failing to meet expectations regularly. It may be uncomfortable, but now is the time to let them go. Outside of a recession, giving these employees the support they need to improve their work output may be worthwhile, but in an uncertain economic climate, you need to be realistic.
However, the dismissal process shouldn’t be taken lightly because eventually, in an economic upturn, you will need to hire new staff again. So follow these steps to ensure you don’t burn your professional bridges:
- Be kind and empathetic, regardless of their reaction.
- Explain why you made the decision so they aren’t left guessing.
- Give guidance on where they can look for financial assistance, such as Jobseeker Support or redundancy advice from Work and Income.
While you may have to let a few staff go, the majority of your employees should still be on the payroll because without them your business cannot function. Chances are they’re feeling uneasy about losing their jobs and not having financial stability, so you need to do everything you can to reassure them that you’re committed to their wellbeing.
Follow these steps to keep your employees in the loop:
- Be transparent about your strategy for the recession.
- Be clear about why some staff were fired and others weren’t. Don’t leave them in the dark about their job security.
- Don’t make promises you can’t realistically keep.
- Offer perks that are within your scope of ability, like benefits that aren’t finance-based.
Take care of your employees
Your employees will be nervous about how to make ends meet so a great way to cultivate loyalty and a productive workplace is by taking steps to look after them. Employee benefits should already be built into the business model, but it’s even more important for employees to feel supported in a recession.
Here are some examples of non-financial benefits:
- Health support, such as free mole checks or dental discounts.
- Flexible work hours.
- Discounts and freebies from affiliated companies.
- Regular team lunches and social events to build morale.
- Professional development and training.
- Increased leave.
- Free or discounted parking.
- Option to work from home or adopt a hybrid work situation.
Reduce your worst-performing customers
Another counterintuitive but vital step for surviving a recession is reducing your bad-fit customers. In fact, according to advice from Forbes, it is worth cutting the bottom 20% of your customer base and while it seems scary, the loss of these customers isn’t such a bad thing. That’s because it means you can deliver better customer service to the people who are well-suited to your brand.
Focusing on your good-fit customers is a much more cost-effective way to generate revenue than wasting time and resources on people who end up cancelling a transaction later in the buyer’s journey. In fact, return customers are worth ten times the value of their first purchase, so it’s worth focusing on their needs more than the people who may or may not invest in the first place.
Gather customer feedback
If you don’t know who your good-fit customers are or how to keep your loyal customers happy, you need to ask for customer feedback. By hearing what your customers need straight from the source, you can ensure your operations are optimised for them to keep them coming back for more. Delivering an excellent customer experience is even more important during a recession.
Not only that but by using customer feedback you can also generate more online reviews, gather testimonials and generate a positive brand reputation to keep attracting new customers. Since customers tend to trust other buyers more than the brand itself, this is an invaluable way to keep your revenue growing.
Collecting customer feedback helps you to:
- Offer more effective support to your customers.
- Make fast, relevant improvements to your processes without wasting resources.
- Prioritise what really matters to your loyal customers.
- Find out where resources are being mismanaged or overstretched.
- Identify brand advocates who can make referrals and share their positive experiences with other potential customers.
To learn more about implementing a customer feedback strategy, you can download our helpful guide. You’ll find out how to take advantage of customer feedback and all the business growth that follows.
Furthermore, you can also sign up to Review Tui for more useful content and invite-only access to our new software launch later this year. With it, you will be prepared with all you need to thrive both in a recession and beyond.