The word of 2022 is ‘permacrisis’ according to The Collins English Dictionary and in my opinion, they’re not wrong. It’s been one nail-biting piece of news after the next when it comes to life and business. Threats of nuclear escalation, soaring food and energy costs, soaring house prices and climbing mortgage rates, have all contributed to the turmoil experienced by families and businesses across the globe.
And now, we have news of a recession which could turn into a ‘lost decade’ of growth for the UK according to the Confederation of British Industry.
But does it have to be?
I personally don’t think it does, not if you take the right steps or explore ways to stabilise and grow your business. In fact, many well-known brands exploded in the face of the 2008 recession because they decided they weren’t going to take it lying down.
Immediate actions
While some solutions will take planning and a little bit of patience, there are some things you can sooner rather than later – even this week if you wanted.
- Decide to keep your business active
You don’t have to head to the nearest bomb shelter or freeze trading any time soon. Instead, reacquaint yourself with your core business strategy or revise it if you need to. This way, you will know you are able to make the right strategic decisions when opportunities arise. The time to act for future success is now. Do not put anything on hold or wait for the markets to pick back up. After all, time is money.
- Review existing systems and practices
This might be as simple as getting your processes down onto paper, so they are out of your head. When you look to grow, you will need support and therefore having your processes clearly laid out will certainly support that.
In doing so, you might be able to identify where processes and systems can be improved, and you can update information at the same time.
- Review suppliers and/or materials
Assessing who you work with and buy from is a great exercise. It could be that buying in bulk will help reduce costs and save waste or that an alternative supplier can provide better materials, quicker and cheaper. If you have not reviewed your suppliers in a while, this is the opportune time to do so. If you can weed out any suppliers that are underperforming or are unreliable before the onset of an economic downturn, you are less likely to be ‘let down’ if they suffer a negative impact to their business. In turn, you will be able to develop stronger relationships with great, alternative suppliers.
- Protect cashflow
Good cash reserves equates to a stronger position as recession approaches. There are some cashflow best practices, which if you’ve been on my course, The Profitable Solopreneur, then you will know all about.
In summary, and for the purposes of an impending downturn, they are:
- Consider alternative revenue streams to alleviate cost pressures
- Explore a B2C option if you have always been B2B or vice versa
- Diversify products and/or services
- Double down on Profit First principles
- Perform a monthly expense analysis
- Get tough on slow-paying customers
- Keep communication flowing
Ensuring you have great relationships and open communication channels for staff and suppliers is key. You are all in the same boat, albeit performing different roles, but your destination is the same and you all want safe passage!
It might be time consuming to catch with everyone who is key to your business, but transparency means that any issues can be identified and resolved quickly.
Strategies to explore
Without labouring the point to much or trying to dig down into the minutia of what steps you should take, here are some ways you can look to grow, even in the face of a recession.
- Innovate
Find new ways to appeal to your audience, expand your products or even explore partnerships with other companies or brands.
- Invest in technology
Although you might be tempted to cut that business credit card in half, investing in the right technology will give you a better chance of coming out of the downturn ahead of your competitors. Whether it’s business analytics, marketing or even just storage and distribution, investing in the right digital solutions will help you grow your business now, and in the years to come.
- Expand into global markets
Why not go fishing in a larger pond? As customers cut their own purse strings, you might need to widen your reach. Investing in the right technology as we have already stated, is a good way to start, especially in a bid to expand your audience.
- Explore working with or setting up a new start up business
It’s likely you already have an established business however, start-ups always do well in recessions, because they are looking to fill a gap in the market. What service or product could you use from a start-up, that will help you bolster your own business? Could you even become that start-up that fills a gap in the market for others?
- Change your business model
This isn’t meant to sound as drastic as it probably does. However, by changing your business model, you might be able to attract a whole new audience. Industries evolve and markets change (especially in a recession) and therefore having a flexible business model will support your growth as you can adapt as you go along. If something isn’t working or you aren’t reaching the right audience, then that’s a sign that something must change.
Companies that thrived during a recession
Netflix
Around 2008, Netflix introduced the streaming service, partnering with organisations like Xbox so people could stream through those devices. By being innovative in this sense, they were able to increase subscriptions. They also continued to provide the perfect product at the perfect price, as people were not willing to give up on home entertainment. What began as being a cheaper alternative to buying or renting DVDs has evolved into a necessary comfort for survival and sanity. Just like ‘Google’ has become a verb, it won’t be long before ‘Netflixing’ is up there too.
Lego
During the 2008 recession, the family-owned Danish company Lego expanded into the global market, concentrating on building revenue in Europe and Asia while the US faced economic distress. Because of this, the company reached an all-time high in terms of profitability. It has since expanded its footprint into China, with a new flagship store in Beijing featuring Lego replicas of the Forbidden City and The Great Wall of China, they see their stores are seen as a great way to build ‘brand awareness and emotional connection with fans’.
Mailchimp
Before the recession hit, Mailchimp focused on large, corporate clients. However, as the recession became a reality, the company realised they needed to widen their reach to smaller and medium-sized businesses.
To reach this new market, Mailchimp was one of the first ever companies to successful employ the ‘freemium’ model, offering a limited version of its services that was completely free to use. Because of this, by 2010 Mailchimp increased its customer base by more than 400% from 85,000 users to 450,000.
The moral of the recession story is, don’t let it stop you improving your business. Hopefully you now have an idea of what is achievable and therefore what you can do to maintain your growth or even improve it as we head into the new year.