Marketers are known as one of the most apparent risk-takers. What if there is a phenomenon that sets them, too, to the alert mode? Yes, an economic recession; is something that corporators have witnessed before but don’t wish to encounter again. The post-pandemic times are proving to be a turbulent ride for enterprises. Followed by 40-year-high inflation makes it even graver.
The corporate world, known for its resilience, will indeed not kneel. This time, the global market will witness a marvellous comeback of businesses into the mainstream. If you are a new entrepreneur curious about how businesses survive a recession, kick back and read along, as we will disclose the time-tested secrets of the corporate giants.
Recession at a Glance: What it is and How to get over it?
A recession is a period of prolonged negative economic growth during which there is a significant downturn in economic activities and a decrease in GDP, inflation, and increased unemployment. All these affect consumers’ spending capacity, leaving an impact on businesses.
The recession after the pandemic is so big that it has directly been compared to the great economic downturn of the 1930s in the U.S., and the comparisons show the seriousness. Have a look at the graphs, and you will comprehend what it means:
Moreover, the inflation rates are at their highest of all time and are not seeming to return to how they were pre-pandemic soon. Though the predictions assure that things are improving, businesses can’t sit assured as these are when underdogs outperform giants. The following graphical estimate will convince you better:
How to Cross the Hurdle: Steps to Overcome Recession?
Now, we are aware of the issue called recession and its impact on the economy. Next is the ultimate question for businesses: how do companies to survive a recession? Don’t worry; we are here to provide the key tactics to walk you through such rough times. Read along, and plan your route.
Diversify the Resources of Revenue
Relying solely on a single revenue source has always been a good idea, especially in times of recession. Such approaches make businesses vulnerable and income restricted.
Of course, there should be a well-planned vision and planning on how, when, and in which direction to diversify the company, but there has to be diversification to cope with income blockage.
For example, a cafe or a restaurant should not only rely on the same menu for a long time, nor should they stick to only dine-in services; instead, they should diversify their menu as per the trends, keeping their vision and speciality alive and included.
Also, along with the menu, they should incorporate online services and home deliveries in their policies so that menu options and delivery issues can help sales and business-consumer relations. This is one of the measures of how businesses survive a recession.
Efficient and Effective Cost Optimization
One of the first things businesses should consider is optimizing costs so your existing consumer base is unaffected. Imagine a firm offering a product of a standard size only at a specific price. Several budget cuts must occur when the cost of living increases during a recession.
Make sure you create a deal that fits that cut-down budget. This budget will help the business retain its customer and can be proven as a lead-generating step.
Handle Churns Wisely
Customer churn refers to the condition when there is no longer an interaction between a customer and a business, i.e., the discontinuation of business. Since we are addressing the topic of recession, we cannot oversee customer churn. It will help if you plan your way out as a business to tackle churn to retain the maximum number of consumers possible.
Focus on user experience, interact with your consumers to collect feedback and advice, analyze them, and show up as a caring, interactive firm that prioritizes its customers.
Review and Restructure your Business Model
As change is designated as the only constant, your business model, too, falls in this bracket. Make your organization’s work culture flexible. Make room for innovation in every field possible, product designing, production sequence, marketing, budget, or anything else.
Follow the agile workflow methodology, so your team can periodically review small developments and plan further steps accordingly. Flexibility is the new strength during a recession for businesses.
When we talk of reviewing, there must also be a review of the consumers. Review the demographics of your current users, recollect consumer feedback, look for fresh market trends, and categorize your consumers based on various factors such as preferences, budget, etc. and incorporate the insights into your strategy so you don’t walk in the dark.
If you still need to digitize, now is the time to build a website, launch an online store, and set up and maintain social media sites. You have seen the power of virtual reality in times of lockdown, don’t hesitate to go digital.
Plan Your Finances Well
Financial planning has already been the most crucial business practice; this has become more of a prudent move to plan out your finances. Try building up at least three-month cash reserves to withstand the extremes.
Take the help of experts if needed and prepare your business for the worst recession possible. Plan your finances realistically and make sure if you are not making profits for the time being, at least you will stay strong.
Take Care of the Employees
For any business or organization, employees are the backbone. Employee morale decides how long you will survive the battle against recession.
Imagine your team as a group of resources, which they are. Treat them as treasures and make sure they are not felt overseen. Open communication channels, address their concerns and maintain transparency.
Ensure their physical and mental health is sound so that the apparent work pressure does not become a burden. Communicate with them, assure them of the good times, address them as closely as possible, and watch the magic of teamwork in action. This is also how businesses survive a recession.
Recessions are part and parcel of the economic cycle. These show up at some intervals, and this time, a global recession is witnessed due to the pandemic and a few other reasons. The low times of business are challenging but possible to overcome. The answer to the question of how businesses survive a recession is, in fact, practical.
Recession can be tackled effectively with the proper steps and correct business practices. Read the article, take notes, discuss with your team, and plan your way out of this phenomenon.