Is Your Business Recession-Proofed? Now Is the Perfect Time To Plan for a Possible Downturn
I am probably one of the few business owners who actually likes a recession, in some cases, preferring it over a booming economy. I know that may sound crazy, but when you really consider the advantages and disadvantages of both a great and poor economy, a poor economy can be extremely advantageous to a strong company. The coronavirus and the recent impact it’s had on the stock market is not what has me thinking about the potential of a recession. Nor am I predicting we are about to be in one. However, a good company should always be ready and prepared. Is your business recession-proofed?
There are hidden opportunities in preparing for a recession. The success stories of the past decade were born from the Great Recession of 2007–2009. Companies were forced to reinvent themselves out of desperation for survival, and creatively found new revenue streams and opportunities by revisiting what they had focused so heavily on during their early years.
Reinvent yourself. We all enjoy it when the economy is booming, which I like to call the “busy bus.” At times it seemed like new business would just fall into our lap, with very little effort. This made many companies content and overconfident. They lost focus on the fundamentals of their business, such as their culture, employees, customers, and the experience they should consistently provide.
Work harder. Success should be hard. It should require long hours, creativity, and sleepless nights. Obtaining new business should be about researching the company and the decision- maker’s hobbies and interests. Keeping existing customers should require touching your customers on a regular basis, obsessing about their satisfaction level, and genuinely thanking them for their business.
Create new revenue streams. This is where the biggest opportunities have been reported. Businesses having difficulty selling their stale products and services have invented new revenue streams with price points many times lower, but many times more profitable. Companies have been able to go deeper with existing customers and acquire new business. More importantly, they provided solutions to customers’ changing needs. These new revenue streams, which would have never been created in normal economic conditions, now represent a larger percentage of their revenues.
Fish when the fish are biting. Good times camouflage poor strategies until it is too late. Examine your staple products, services, and peak times to ensure you are positioned to take full advantage when the fish (your customers) are biting.
Experience is your marketing. Providing an experience, versus making a sale, means quit going after new business and focus on the customers who are trying to give you more of their business. Go deeper with them, build stronger relationships, anticipate their needs, follow up, say thank-you spontaneously, and if there’s a problem – fix it. Fight for every customer.
Get staff buy-in. When there is speculation about an economy turning, this is the best time to act and make the necessary changes. Educate and remind your employees about what happens during a down economy. They may have been a victim of the last recession or definitely knew someone who lost a job or had to take a significant pay cut. Employees become more willing to cooperate, band together, and make sacrifices to step up and fight if the future of their company and their career is on the line.
Reduced competition. “Even a turkey can fly in a tornado.” When demand is up, leadership becomes more focused on optimizing sales and can become careless about details. Even poorly run businesses will flourish in a great economy. The American Customer Satisfaction Index reported that consumer happiness dropped in 2017 and has not risen since. When the economy softens, the tornado stops, and a lot of turkeys start falling. Poorly run businesses are exposed and eventually go away – which means significantly less competition for the businesses that survive, and an opportunity for them to gain market share.
Employer market. Though the pandemic has upended business as usual, when the economy slows, the pendulum swings from an employee market to an employer market. More talent becomes available for existing businesses to choose from, and they can build their culture on purpose, versus adding warm bodies, like many did pre-Covid as they expanded.
Efficiency becomes back in style. If you act as if a recession is coming, you start finding more cost-effective ways of trimming fat, reducing downtime, increasing staff productivity, and eliminating positions and people who you were compromising on. These are things we all should have been doing all along.
So whether a future recession is far or near, it’s best to be prepared and benefit either way.
John DiJulius III, author of The Customer Service Revolution, is President and Chief Revolution Officer of The DiJulius Group, a customer service consulting firm that works with companies including Starbucks, Chick-fil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or firstname.lastname@example.org.
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