The Great Recession from 2007-2009 was a learning experience for many business owners including myself. I remember a wide range of emotions ranging from the fear of failing, excitement, doubt, back to fear and then confidence. Thankfully my business grew significantly during that time but it was not a simple task and required a smart strategy. The Covid pandemic, inflation and recession makes this another volatile and uncertain time for small business owners. Large companies are laying off their employees, Google told their employees to become more productive, Facebook told their employees “Realistically, there are probably a bunch of people at the company who shouldn’t be here” and recently Robinhood announced they were laying off about 23% of their workforce. The atmosphere for business owners and employees is scary.
There are numerous steps you can take as a small business owner to protect your business during these more difficult times. This list is far from comprehensive but just a few that came to mind when I was reminiscing about the recession in 2008. First and most importantly, even if your business is thriving now – plan for the recession to hurt your business significantly. Preparing now will likely significantly lower the effects of it in the next 12-24 months.
1. Cut Costs – Not Employees. Employees are your largest expense, but also your best investment. As a business owner you already know the heavy expense of finding, hiring and training talented employees – along with them being a great fit in your company culture. The first thing I would suggest is reviewing every single expense and creating a list of items that are absolute needs down to luxuries. When you are reviewing these expenses, I suggest thinking of them as people’s salaries. As an example, if I can cut our travel expenses down from $10,000 a month to $6,500 a month – that will save “Employee A’s” job. It is also likely you have not had time to review all of your expenses and contractual obligations. A recession is usually the best time to get price cuts including lowering your rent, lowering your phone bill, lowering large services fees and so on. I have seen some businesses cut their costs by over 20% just by calling all their vendors. Before letting anyone go I suggest evaluating every single option possible including cutting your salary and being transparent with your employees. I would venture to say that most employees would remain loyal to you if you have been loyal and honest to them. If you have to temporarily cut employees’ pay, do it across the board and make sure that the first salary cut is yours. It is also vital to explain what business benchmarks need to be met in order for the pay cut to stop.
2. Do not stop marketing – but market smarter and track your results! There is no better time than now to actually spend the time evaluating all of your marketing efforts. Like most business owners, you are entrapped by the day-to-day tasks of running your business but not really tracking and paying attention to what marketing efforts are and are not performing well for you. I highly suggest not lowering your marketing budget which I believe would be a detrimental mistake to any business. Customers are your lifeline and it is vital to stay in front of them. It should be a relatively easy process to understand which marketing efforts are and are not working for you – especially if you are primarily getting business from online marketing. This subject alone can easily be 25 pages – but to keep it brief I will provide a few examples. If you are using pay-per-click marketing, it will be easy to see which terms are converting into actual business for you and which terms are not. This should be done for you already but usually it is not the case. If you are spending $10,000 a month on PPC, but half of it is being wasted on non-converting terms then you should reinvest those funds into the terms that are yielding the highest return on investment. Seems simple but it is often overlooked especially when times are great. Another example of marketing smart is truly understanding your ideal customer and marketing directly to them through paid advertising on sites like Facebook and Google. Targeted marketing (includes retargeting) is more important than ever during a recession. It is always important to review what marketing efforts work and do not work for your business. This allows you to adjust your marketing dollars so that they are being spent on programs that are generating the most revenue for your business. These are just a few examples of marketing smart during a recession. Also, tracking the results from all your marketing efforts is easier than ever and there is no good reason to not understand what marketing endeavors are producing the most results for your business. We suggest reviewing our blog series “The Top 10 Small Business Marketing Mistakes” for more helpful advice.
3. Time to Expand Your Business! If you have been considering expanding your marketing and business into a new target market, new segment or start marketing new services that are easy for you to implement, this can be the perfect time. Most small businesses will use the fear of the recession to hold back on marketing efforts and usually cut back on their marketing when that is the absolute opposite of what they should be doing. This gives you a unique ability to grow your market share at a lower cost. By keeping the same marketing budget you can easily expand your reach and target market giving you a much larger customer base. Expanding your customer base is one of the better decisions you can make because the larger number of potential customers you have the higher the chance your business will grow. One important thing is to make educated decisions by knowing and understanding your competition – along with your target customer. Marketing smartly gives you the unique edge over your competition of knowing exactly who your target customer is, exactly why they choose your business and the exact price point that converts at the highest rate. If you have not ever done a competitor analysis, it is a very wise investment for your business.
4. Employee Training is more important than ever. During a recession it is vital that your employees are properly trained in all aspects of their jobs. It is widely proven that employee training is extremely beneficial for the business and also for the employees. A well trained staff leads to a more productive staff and a more profitable business. It is also important for your customers. Customers choose businesses based on the value they receive including the overall experience – not just the product or service they purchased. A well trained staff provides better customer service, serves your clients more efficiently and increases customer retention and word of mouth business. One simple step you can take as a business owner is the time to invest in effective staff training. When you are competing with numerous businesses for similar customers there has to be things in place to set your business apart from the rest – having the most responsive and best trained staff focused on serving the customer is critical and apparent from their first contact with your business.
5. Do Not Panic. As a business owner, panicking clouds your logical and rational thinking – impeding your ability to think clearly and make rational decisions. It makes your choices more emotional and less strategic and the majority of the time that decision will be the wrong one. Harvard Business Review provides the best advice explaining the importance of slowing down when making important decisions. It is vital that when you are facing such a significant decision which can affect your business and your employees that you take the extra time to truly step away giving yourself the ability to not make a panicked decision. This does not mean just taking a deep breath – it means devoting actual time to anything other than that decision in order to clear your mind.
As a small business owner it is important to do all you can to prepare for hard times when a recession is or is not the near future. There are far more than the 5 tips mentioned above that you can do immediately to help your business prevail during tough times. Learning from others who have been in your exact same situation might be the best solution to all of your business needs. We invite you to explore two solutions that numerous other business owners have found helpful. The first is to continue reading through our Small Business Marketing Advice Blog which discusses everything you need to know about marketing your business successfully. We also highly suggest you consider reviewing the Business Owner Consulting Program which was built specifically for small business owners giving them an affordable solution to get advice from other small business owners in non-competitive markets as well as one-on-one consultations with highly sought business consultants. You can also request a free 20 minute consultation to get free specific business advice as well as figuring out if the program is right for your business needs.
Written by David Phillips, CEO and Founder of SayWhat Consulting. With over 20 years of experience, Mr. Phillips has consulted with small, medium and large businesses in marketing, business management, staff training and day-to-day operations. SayWhat assists clients in numerous industries including cosmetic surgeons, plastic surgeons, med spas and attorneys in family law and criminal law. We also assist other industries as well and our primary clients are small and medium sized businesses.