Our current COVID-19 world is not business as usual. Many of our local businesses are closed or running on a limited or new business model; the word recession has come across our radar. If you were paying attention to the economy in late 2019, you also heard the word recession being thrown around as an omen for mid to late 2020. I asked Courtney of Homeroom, a Financial Strategist for Businesses, what are some things we can do now to prepare our businesses for a Recession. The following is contributed by her.
Jade asked me last fall (in 2019) to write a post about the general strategy for businesses during a recession. When I originally wrote this post, I obviously had no idea that we would be in the middle of a pandemic when the post was scheduled to be published. Given that we’re currently in the thick of it all -- and many business owners are wading through some real uncertainty (at best), it feels like perfect timing for this post, but also there is a caveat that needs to be given.
This is not like any other time we have EVER experienced. Yes, we’ve seen recessions before, and yes, we’ve had a worldwide pandemic before (~100 years ago), but we have never had either while we also have so much accessibility (for most businesses/people) to technology. These are quite literally unprecedented times! So while the bulk of the post that I wrote back in November is still relevant, it needs to be said that NOBODY knows what is going to happen in the coming weeks/months/years. It’s just as possible that our economy will bounce back as quickly as it halted, as it is possible that we will enter another worldwide depression. Obviously, the more likely reality is somewhere in the middle of those two extremes.
The point being is that there is no one cure for businesses. If anyone tells you they know what will happen next week or next month, and they have your business solution, be like Usain Bolt and RUN, far and fast. News changes not just by the day, but by the hour. As things develop, all of our businesses will be impacted, and nobody knows for certain the ripple effects (either good or bad) that will emerge in future months, years, or decades. Most importantly, there needs to be flexibility. We’ve seen things change at a moment’s notice, and those that are the most flexible and nimble will always find a way to float to the top.
What I had hoped to convey in my original writing (below), and what is still relevant today, are some tips that will be useful in any dramatic change to the economy.
Recession! It’s a scary word! And for good reason.
I graduated from college in 2008. Many of my classmates couldn’t find a job, and some of their parents lost their jobs. Businesses were forced to cut expenses and downsize in order to survive -- and even worse, many small businesses didn’t survive. It took years for our economy to recover and for small businesses to finally bounce back to pre-recession numbers.
And now you’re thinking “Jade brought this clown into her blog, and she saw fit to scare me with nightmares of business’ past?! What gives?” And yes, it’s a grim picture, but fret not. I’m not here to fill you with fear. I’m here to give you hope.
Yes, of course when times are tough, it’s important to hit the books and re-strategize from a financial perspective -- but that’s likely to only get you so far. How do you stay sustainable? How do you keep the door revolving? Hint - it’s about really diving deep knowing the customers that are unique to your business (your target market).
The most pivotal element in creating a great business strategy is understanding the value of what you have to offer AND how it’s perceived/valued/used by your target market. In a recession, the latter is likely to change. Which means something in your business needs to change as well. And there are a few ways to start thinking about how your business will need to pivot.
Understand how your target market has changed (or is likely to change if your working on potential future scenarios)You’ll need to alter your marketing strategy to meet your target market in their current situation. In a recession, most consumer groups will tighten their belt. They are less likely to spend frivolously and even in large corporate situations, budgets will be scrutinized. You need to understand how tighter financial constraints are going to change the buying habits of your particular target market. Maybe it means simply altering your pitch -- you’ll speak about your value in different terms, or maybe it means altering what you offer -- perhaps bundling/packaging.
Change your target market and start to understand the new mindsetIf your pre-recession target market is no longer able to afford your services, you can’t keep begging them to come back. You’ll need to change who you’re talking to. Who is likely to value what you offer in a recession? How are they different? Does your marketing need to be altered to appeal to a new group?
As always, gaining a DEEP understanding of your target market is essential. People evolve. Customers evolve. Consumer behavior evolves. A recession is a jolt in buying habits. Instead of taking years to evolve, your current customers are likely to alter how they spend money in a matter of months. We’ll all keep our fingers crossed that the economy keeps steadily growing, but it’s always a good idea to hone your inner boy scout, and “be prepared”.
While all of this was a hypothetical scenario last fall, it’s real and relevant today. A few industries are thriving, but most businesses are reeling. It’s okay to take a moment and take stock.
It’s important to keep perspective, to know that things will continue to change. Stay flexible, and keep your ear to the ground. Listen to your target market and respond authentically. If you have value to offer during these months, it’s okay to keep offering it. Be mindful of how your message is conveyed, but it’s important as a business to keep moving. Stagnation will likely result in a larger gap once the economy is moving all together again. If nothing else, it’s a great time to organize and create systems that you’ve never had time for in the past.
Also, know that we’re all in this together. Take care of yourself and your friends. Reach out to others to offer a (virtual) hand, and ask for help as you need it. Be safe, stay home (if you can), and keep moving. :)