True entrepreneurs love recessions. Why? Because recessions serve as a form of “natural selection” for businesses. Weak businesses and poorly-managed businesses go extinct, presenting opportunities for growth and expansion to those who are savvy. This means less competition for valuable clients and customers, as well as a larger talent pool of potential employees. However, before you can thrive in a recession, you first must learn how to survive. These five tips will help keep any business off of the “endangered species list”.
1. Buy, buy, buy! Recessions are the perfect time to purchase supplies, inventory, and equipment for pennies on the dollar from other businesses that could not survive. No matter what you need, a recession is the perfect time to buy it cheap, from desks and computers to shelving and retail store fixtures. These purchases can help you expand, but in a worst-case scenario they give your business additional assets that you can turn into liquid capital later.
2. Show your appreciation to your customers. The key to business success is not simply having customers, but having repeat customers. Use a recession to build customer loyalty by offering special rewards and promotions, and don’t forget to knock ’em dead with superior customer service.
3. Stay true to your mission statement. A recession is not the time to make a radical change in your business plan. That’s what the good time are for. Stay true to your goals, ideals, ethics, and values and you have a much greater chance of weathering the storm.
4. Know which corners are worth cutting. The natural reaction to a recession is to decrease spending. In theory this is sound advice, but if you cut your spending in the wrong places, you are only going to do more damage than good. The first place to “trim the fat” is payroll. Reduce employee hours, and if need be, part company with employees who are “dead weight”. Cut back on advertising, but not to the extent that you become invisible to potential customers.
5. Stick with what you know. Many businesspeople are tempted to expand their service or product offerings during a recession, in the hopes of boosting sales. This is the last thing you should be doing during a recession. Think about it. When you’re running late, do you look for alternate routes in the hopes of finding a magical shortcut to your destination, or do you stick to the route that you know will eventually get you there?
These five basic tips will help keep your business afloat during uncertain economic times, whether you are a small “mom and pop” shop on Main Street, or a large corporation.