Companies, of all sizes, are ultimately in the business of making money. But, with recession, many businesses struggle to keep their footing and avoid lasting damage while the economy stabilizes.
According to the National Bureau of Economic Research, a recession is defined as two consecutive quarters of economic contraction in the nation’s gross domestic product (GDP). There have been numerous recessions in the United States since its founding, some being more serious and long-lasting than others.
So, as a business, how do you protect yourself during these periods of instability without losing momentum in your industry? The key is looking to your strengths and identifying ways to succeed even during an unstable period. Three key areas of focus are:
- Staffing
- Products and Services
- Client needs
Avoid The Rush To Layoff Staff
Your staff is your superpower, and too often in moments of crisis, the first instinct is to reduce a workforce to save on expenses. This is a short-sighted move and potentially sets you up for even more problems when the recession ends as you struggle to find competent replacements.
Instead, work to leverage your staff to the best of your ability. One way to do this is by having workers take on additional or complimentary duties that might normally be outsourced or to which the individuals have supplementary skills; for example, having a customer service representative also take on website updates.
That being said, it still may make fiscal sense to reduce payroll to support the bottom line. However, before laying people off in totality, ask them if they’d agree to go to part-time temporarily. Many people would rather keep their jobs and have the chance to go back full-time when things get better rather than find themselves on the unemployment line.
Whatever you choose, be sure to let staff know you’re all in it together. Show them you mean business by making other company-wide sacrifices and changes like canceling expensive trade shows and postponing executive bonuses. If you protect your staff during the recession, when it’s over you’ll still have a strong workforce and a potentially more loyal one at that.
Shore Up Your Current Product/Service Offerings
Whether you offer a series of products or specific services to your clients, simplifying what you make or offer can be a good temporary cost-saving measure.
Unless there’s a contracted and pending sale to offset production costs, put new product development on hold. If this isn’t possible, at the very least scale back development expenses. It’ll be more difficult to interest clients in a brand-new product while they’re trying to move through a recession, so hold on to that new item until things improve if possible. The same can be said for service offerings, as periods of recession are not the best times to add service features that clients may find unnecessary during the downturn.
Instead of new development, focus on the products and services you already have, and look at them critically. For product-based businesses, see if you can do something different with your items or use them differently to meet an immediate need. What about the raw parts that build your products – can they be used in another capacity?
For services, perhaps offer simplified options. Temporarily deactivate or hold back one or two aspects of that service to make it more affordable for a client, but allow you to still make a sale. You can always reinstate those features when the environment improves.
Getting creative with what you already have to offer is a great way to still provide value to existing or new clients even in tough times.
Look For Ways To Specifically Help Key Clients
Just like you, your clients are looking at the recession warily and have their concerns. While it’s true not all businesses are hurt equally by a recession, symptoms still touch all companies and those concerns are what you should look to address.
It’s not so much that you’re trying to profit from their woes, so much as you’re trying to offer a solution to their pain points, transfer some dollars to your bottom line, and help them with their sales.
The quickest and easiest way if you have some wiggle room in your part/service MSRP is to cut the cost temporarily. If you have items sitting on shelves, converting those to sales will help you survive a recession more than housing them indefinitely while waiting for a turnaround. The reduced cost will also make it easier for your clients to justify the expense.
Other ways to help could be something more outside the norm, like renting out a portion of your warehouse to help them reduce expensive storage fees or partnering in marketing expenses to share costs.
You know what your clients do and can guess the needs you could assist with thanks to that preexisting relationship. So put yourself in their shoes and look for the trouble spots they’re experiencing, and then come up with a plan of how you can aid them. Even if they decline the suggestions you put forth, the remembered offer of support may benefit you when things improve economically.
Recession isn’t something embraced or hoped for by most businesses, but it’s unfortunately a sad reality. It is possible to survive this sort of downturn, but in what condition your company emerges at the end is something you can control. You just need to avoid acting hastily and think all sides of every situation through fully before acting.