Economic recession is an unavoidable reality that hits small businesses and new entrepreneurs the hardest. As a small to medium enterprise (SME), being prepared for the aftermath of an economic downturn is important but history has proven that at times even keeping the doors open for trade can become a losing battle. Nevertheless, there are several best practice steps and strategies that you can undertake to enable you to not only survive a recession but – if executed effectively – even reach greater heights in your business.
1. Focus on keeping existing customers
During a recession, more attention should be afforded to existing customers, rather than trying to attract new customers. It is counterproductive to try to enlarge your market while neglecting and losing existing market share. Endeavours such as loyalty programs directed at rewarding existing customers unequivocally prove your appreciation of their continuous support.
2. Make use of cheaper marketing strategies
The internet and social media are inexpensive, yet highly effective platforms that help keep your brand visible in the vast online marketplace. Maintaining interactive communication with your customers through social media platforms and advertising specific specials through them, will generate effective and sustainable brand awareness.
Involving your business in small community events, such as the local school’s bake sale may appear trivial, but can generate positive market sentiment and help maintain confidence in your brand – even in times of economic distress.
3. Take advantage of openings left by those who have closed down
Look out for gaps in the market that may have been created by businesses that have been forced to cease trading. During a recession, the number of purchasers and the volume of purchases decrease but does not disappear completely. As a small business, you can provide the same or similar goods, once provided by a former competitor. To your further advantage, you can also comfortably handle the smaller number of customers and orders which bodes well in developing sustainable business relationships. As the economy begins to recover once again, you will subsequently have gained a larger customer base, built on being able to deliver and grow loyalty.
4. Determine what is the core of your business advantage
This knowledge will reveal your priorities as you determine which areas of your business are the most important when it comes to strategic, long-term outcomes. This can be assessed and established in terms of the main contributors to key performance indicators, such as revenue and bottom line. You should not waste valuable time and other resources on areas that are not crucial to the survival of your business, to ensure you successfully navigate through times of difficulty.
Small businesses also have the advantage of providing personalised service and uniqueness that larger businesses cannot provide. This would be the opportunity for your business to make this known to customers that do not have the money to waste on poor service.
These are a few core guidelines that can be adopted if you are experiencing operational challenges that could easily spell the closure of your enterprise. While there are a host of other tips, the key lies in careful timing and diligent execution of appropriate steps and measures. Remember, being proactive and building your business by design rather than by default is another page business owners can take from so many accomplished entrepreneurs of our day.
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