Here’s what you can do right now to thrive during the recession (COVID-19).
During times of extreme economic stress like the one we are currently experiencing due to the COVID-19 pandemic, businesses panic. In doing so, they take a defensive rather than offensive posture in their effort to mitigate potential losses and stay afloat. The issue, however, is that these are precisely the businesses that will fail.
Some businesses, on the other hand, not only survive economic downturns but actually grow through them. How?
First and foremost, these businesses view recessions not through a lens of fear, but through a lens of opportunity.
Indeed, every economic downturn poses opportunities for every business. But not every business sees it this way.
During times of economic uncertainty, most businesses are reactionary. They immediately contract their operations and reduce costs. They cut spending on core, essential services like advertising and marketing, engage in lay-offs and reduce output.
This is precisely the reaction that will cause them to fail.
Businesses that grow adopt the “10X Rule,” which essentially states that it will take 10 times the effort and resources to grow during the storm. They take an offensive posture. Rather than contract their expenditures, operations and output, they expand them. And they do so in strategic ways that include certain steps.
5 key strategies to grow your business during a recession:
Increase marketing and advertising spend
When done right, business leaders know that marketing and advertising is what delivers more business. They also understand that during a recession, the majority of other businesses, including many of their competitors, will be reducing their marketing and advertising spend.
Wise, proactive business owners and/or management teams therefore increase their marketing and advertising campaigns. Implementing a strategy of marketing more aggressively while competitors pull back, yields a compound positive effect and tangible results. Companies that cut their marketing and advertising expenditures during a recession will suffer an even greater loss of business, thereby creating a self-fulling prophecy of failure.
Cut the bottom 20% of their worst-performing customer base
While it seems counterintuitive, this is actually what major corporations do to thrive. We all have clients or customers who are slow to pay, are extremely difficult, or require a disproportionate amount of your staff’s attention in relation to the revenue they generate for your business. Cut these customers now.
If you increase your marketing efforts you will attract new business that requires additional internal resources. By cutting the bottom 20% of your customer base, you free up resources and the capabilities of your existing labor force so you do not need to add to your payroll with new employees.
Improve operating processes and deliver better services and customer experience
This is precisely the time to look at your operations from a quality control standpoint, brainstorm with your employees, and determine what you can do better for your customers. You need to be head and shoulders above the rest and if you are offering mediocre service, prospective customers will go elsewhere. This should not even be an option at this critical time. By offering enhanced customer service, you will be building even greater customer loyalty.
Find ways that you can improve and further streamline your operating processes so that your team can function more efficiently. This will ensure that you can succeed in the next critical step:
Service more customers with the same or even fewer resources than you are allocating now.
By enhancing and improving your operating processes, you will now have the resources needed to service the increased number of customers gained from following the preceding steps.
Fire your worst employees, while assuring the rest of your staff that you are committed to them and their well-being.
We have all had employees that do not perform as needed. Perhaps they work at 50% output, or they are a toxic person who disrupts the harmony of your team. There are times that we do not fire these people because they fill an essential function at the company and we figure that keeping them on staff, even at a cost, is easier than training a new person or disbanding the role all together.
Whatever the case may be, this is the time to take action. Your business needs it. Your team needs it. Your customers and clients need it. There is no room for self-defeating during times of recession. If you are able to fill the role with someone new, consider the expanded talent pool a recession provides. You are not without options.
Conversely, good employees are invaluable, which is why you should assure your core team that you will stand by them through the crisis. That the business can go into the red this year (and hopefully every business has reserves or a line of credit to make this assurance) if need be in order to keep the team together.
If you let go of a good person, it will destroy the morale of your entire team because each employee will wonder “am I next?” Fear reduces productivity, and rightly so. So assure the good people on your team that you have their back. If you do so, they will have yours.
So, in summary you must:
- Adopt an expansionary mindset and an offensive strategy.
- Expand your marketing campaigns to increase business.
- Eliminate 20% of your worst-performing clients to free up internal resources.
- Enhance the customer experience to strengthen brand loyalty and increase customer base.
- Improve your operations processes to create greater efficiency, which in turn makes it possible for your team to address the needs of your increased customer base.
- Eliminate underperforming employees to free up capital for employees that deliver and resources needed to keep up with increased demand. And assure your core staff that you have their back. This ensures they will work equally as hard for you and the business.
Did we ever think that in the beginning of the year 2020 the world would be hit with a global pandemic the likes of which we are seeing now? No. But recessions and extreme economic downturns have happened before and there are businesses that thrived in the face of all uncertainty.
It does not have to take unlimited financial resources. It just takes proper strategy, an offensive posture, and an expansionary mindset.
Remember that people everywhere — including your customer or client base — still rely on you to provide them with the goods and services they need during this recession. Be there for them. Let them know you are still here and with better products, services, and customer care than ever. We are here for our clients and team members in this exact same way.
Your business will prevail. And we stand with you.