So how does an entrepreneur succeed in a recession with rising unemployment and consumers watching their spending?
Become indispensable: Show that your product or service is part of the solution by pointing out the consequences that could occur if they don’t use your product or service.
Invest in the future: Most recessions last only a year or two. Companies that fail to continually invest in business improvements such as training and marketing are usually left behind when the economy recovers. In terms of training, consider how to cross-train your team members while business is slow. It may enable you to perform better later on.
Seek out referrals: Nowadays, many businesses assume there are no sales to be made, so they stop trying and sit on the sidelines. While sales may be harder to come by, make contacts now so they will pay off later, particularly, if you have reduced your advertising, referrals will be your best bet for generating customers. You can also create a programme that rewards current customers for referrals.
Strengthen your ROI pricing offers: Customers often question the cost of a product or service because they can’t always tie it to a result, and that scrutiny only increases in a bad economy. Offer pricing related to specific results. For example, an accountant can charge a percentage of a person’s tax refund plus a “filing fee” for a limited time. This approach enables them to charge more for its services, but customers know upfront what they’re getting.
Be loyal and focus on retention: Have an honest conversation with your employees, they can usually help you cut costs even further and when the recession is over, your employees will be more likely to stick with you for your honesty.
Maintain a fun environment: When companies cut out the fun, it can negatively impact employee job performance. If you’ve sponsored parties at work for years and can’t afford to do that, maybe you can need to have a “dutch day” when everyone brings a dish and you celebrate being in business with a 2- hour lunch break. Reward punctuality, no sick days or absences during the month with an afternoon or morning off. These little “gifts” can encourage your staff to provide consistent service to your customers.
Celebrate being small: Many smaller firms are more nimble than larger firms because they aren’t loaded down by multiple management layers and overlapping operating units or debt, so they can make decisions quickly and re-focus their cash to take advantage of new opportunities for example sales on computer hardware and software upgrades.
Don’t leave room for doubt: Competitors will take advantage of any opening, and they will be more aggressive in making promises during the recession, even if it means filling in your silence with a few tales of their own. Don’t open doors for them by closing down communications with your customers. Instead, increase the frequency of communications with your customers through social media thus reducing your advertising budget.
Fight the urge to give things away: In order to attract customers, businesses tend to offer free products and services. When the recession ends it will be hard to charge again. Remember, if your product or service carries a benefit, it’s worth paying for, even during a recession. However, for loyal customers may be having a hard time paying their bills, offer discounts and settlements. Make this a one-time only benefit to get things current. This little gesture can go a long way in improving your bottom-line and will appreciated by your customers.
Bonus tip: drop unprofitable customers: The natural urge is to hang onto every customer, but analyze your customer base and find out which ones are the most profitable and which ones are costing you money.
Recessions aren’t fun, but they don’t have to cripple your business. Smart business owners leverage opportunities during recessions rather than lament all through them.
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