As we've seen in recent years, economic downturns can be challenging for both businesses and consumers. According to economists, there are signs that Canadians can begin to be optimistic about the year ahead. However, the past three years have more than proved that it’s not unrealistic to expect the unexpected.
So, are businesses letting their guard down prematurely? A recent survey revealed that only one-third of Canadian companies are actively recession planning.
History has shown that 'better safe than sorry' is a wise direction for businesses to take. However, planning for the unexpected doesn't need to be complex and cumbersome for business owners. Below, we've broken down some great proactive strategies, from focusing on marketing to mixing up your product offerings.
Review and prioritize your marketing
Contrary to what you might think, investing in marketing during economic rough patches is not just important, it's crucial. Promotions and marketing efforts can be key to acquiring new customers, helping to offset any potential loss of business. A review of your current marketing strategy ensures that your marketing efforts remain optimized, continuing to generate revenue even during tougher periods.
Only buy what your business needs
To make your business more resilient, try aligning your expenses with your sales. This means covering expenses like office supplies from sales generated rather than using credit or savings accounts. This approach helps maintain a healthy cash flow, which is vital during economic contractions.
Nurture your customer relationships
Focusing on customer relationships is arguably the most effective recession-proofing strategy. Exceptional customer service leads to repeat business, which is crucial during economic downturns. Remember, retaining existing customers is often more cost-effective than acquiring new ones.
Assess your business objectives
Evaluate your workforce to ensure that your team's skills align with your business’s needs during a recession. You should be prepared to make necessary adjustments to maximize efficiency and productivity. This can be especially true if your business outsources services like financing or marketing/design. Automating some of these processes could help cut expenses, allowing your business to save some extra cash.
Operate within your budget
Operating within a budget is a fundamental practice for ensuring business stability, especially during economic downturns. Given the economic climate, following a spending plan helps your business make smarter choices and avoid unnecessary spending. This is key to keeping your business financially stable.
Broaden your service offerings
Expanding your current product offering can open new opportunities for your business. Not to mention, it can act as a buffer during economic fluctuations. By delivering new services that target new customers, you can help mitigate the risk of revenue loss.
Recession-proofing your business involves a mix of strategic planning, financial prudence and strong leadership. Focus on these areas to build a business that survives and thrives during economic downturns.