Tips to Ensure Your Business Survives a Downturn
Economic downturns are an unfortunate cycle of the economy. But, just like the changing seasons, they happen.
They fundamentally occur due to lower consumer confidence and spending, limited cash and credit availability, and job insecurity or instability and higher unemployment.
This month the Federal Treasury Secretary, Dr Steven Kennedy, released a statement warning, and confirming, that pandemic restrictions are still evident, and that the recent recovery of consumer spending is likely to slow as the increased cost of living and interest rates again reduce capacity for household spending.
Any business operator who soldiered through the pandemic would know a little bit about resilience. They would also understand that the stronger the business is, the more able it is to weather risk and unforeseen events, including economic downturn.
Strengthening your business isn’t just about financial management. It’s also about marketing your business smartly (and affordably) to broaden and retain your client base, seeking opportunities to form networks, looking at the competitor landscape, and importantly improving your business practices and keeping your staff morale positive.
Financial Management
There may be some difficult decisions to be made regarding your product or service pricing, or your other internal expenses. These are decisions that can have an instant effect on your cash flow. Taking a look at your annual budget over comparable periods can help you identify and manage costs and debts to free up some cash and possibly mitigate some of these difficult decisions.
Do you have inefficiencies in your business operations that can be automated? What resources do you really need to maintain (or improve) your current output?
Can you undercut your competitors? Sure this may mean fewer profits short-term, but it can also give you time and space to prove your worth and improve your reputation long-term.
Smart Marketing
A review of your marketing strategies can identify ideas to increase sales, and better ways to spend your marketing dollars. All businesses will be competing on price, so your competitive advantage and your unique selling proposition (USP) should be your focus for communications, so you stand out from your competitors.
Don’t abolish your marketing, you’ll reduce your online (and offline) presence, leaving a gap for your competitors to gain traction. Continued marketing during tough times will keep you front and centre in consumers’ minds. They’ll trust your stability, and trusted brands are the brands consumers return to.
Temporarily reducing your marketing spend can work (for instance reducing your radio ads to half the air time) then bolstering it by exploring free marketing tools – social media and word of mouth (testimonials) can be advantageous. This also keeps you in contact with your existing client base.
It’s also important for businesses to realise that consumer behaviour is likely changing long-term in response to the pandemic, mistrust in business and even the more recent cyber-security breaches; generally, consumers will be more discerning. Changes to marketing strategies should be undertaken with long-term sustainability and adjusted consumer expectations in mind, while keeping the messages positive.
Look at the View
Pretending nothing’s happening or being an ostrich won’t help. It may be tough to see, but watching the business landscape, particularly in your own sector, is a good way to see what’s happening, and what may be next for you.
Reading the headlines and subscribing to business newsletters can help you identify what not to do, or what you should be doing to strengthen your business. Hiring freezes, cancelled product launches, and in some cases laying off large numbers of staff, are just some of the things some of the biggest corporations in the world are doing right now.
It can help you identify what may or may not work for your business now and moving forward.
Opportunities and Improvements
While some businesses lose, it opens up areas and resources for other businesses to gain. With some businesses closing their doors, could this be a time when you can gain their customers’ attention and their business? Consider the flip side also; as staff get laid off, it may offer you better access to significant talent or experts who competitors are no longer battling for.
All businesses will be experiencing the downturn to a certain point, so it could be the perfect time to negotiate terms with suppliers and partners for a better deal from both.
It can also offer you time to investigate your systems and processes, and implement automations where beneficial – this not only saves on labour in the long run, but can establish systems for long-term productivity and scalability. Automation can also mean that your teams can focus on customers and lower staff costs moving forward.
Staff Morale
Just like your marketing messaging should be positive to your customers, so should your internal messaging and behaviour.
You should get down and dirty with your team, and lead from the front-line. Get involved, so they can see their work is important, and you are seen to be making a valued contribution too. It may mean working long hours, but you should do that before asking anyone else to.
Clear communication around the position of the business – even when a little grim – assists with morale building and motivation. Get them involved in the decision making and solutions. If they can see what you see, it can make it easier to reduce hours, find flexible solutions such as job sharing, and train staff to pick up the slack if you are resolved to staff-cuts.
Be Ready
We can’t be 100% positive about how rough things will get, but we do know that businesses need to be adaptable, to meet the business landscape and consumer behaviour changes. A downturn is a perfect time to reassess, realign and implement significant changes for longevity.
Identifying your pain points, and adapting your strategy to address those shortfalls, can enable a strong foundation to be flexible and pivot to weather a market downturn.
If you’re in a position to benefit from outsourced advice on your forecasting and budgets to strengthen your business, and make the best decisions, we can help.
We can work with you to drive greater cost efficiencies, and sustained growth, more accurately than an in-house operator.
Contact us to discuss your business concerns, and how we can develop a strategy to strengthen your business through a downturn.