Recessions can be brutal for small and medium enterprises. They can also provide the opportunity your business needs to gain ground on your competition. With a few tactics and strategies, your brand can become elevated in the minds of your audience.
Not All Recessions Are Created Equal
Recessions come in different types as to how they affect economies. Depending on the factors that trigger a downturn, recessions can affect real estate, credit markets, or even traditional safe havens like bonds and precious metals. Recessions will affect your business in unpredictable ways and you need to have a plan so that you’re not left behind.
In order to make the best of a recession, it’s important to identify the aspects of your business you need to focus on. Impulsive moves can be costly as economic downturns tend to starve markets of valuable cash flow. Let’s look at the biggest mistakes to avoid and the things you can do instead to navigate a recession successfully.
Mistake: Disappearing Off the Face of the Earth
One of the areas business owners tend to downsize during a recession is their marketing budget. It’s easy to make the mistake of viewing funds spent on brand building as non-essential.
By cutting your marketing budget, you’ll be reducing your business’s exposure through ads and social media. Prospective clients will see even less of you and you will end up closing fewer sales. Economic downturns are periods where you need customers coming through your doors or calling for your services.
Instead: Create Synergies in Your Marketing
Social media can be leveraged to broadcast your message without costly ad campaigns. Although Facebook and other platforms limit how many of your followers see your posts, finding creative ways to overcome this without breaking the bank is key.
Try spending a few more hours working on your social media or hire a younger individual to do it for you. College students or even high school seniors with ample social media experience can work wonders. Make sure you set clear guidelines that have to do with your brand and set them loose.
Streaming, strategic giveaways and clever posting can make content go viral. You don’t have to sacrifice effectiveness for affordability. An added bonus is that you will maintain the benefits of a cost-effective social media marketing strategy after the recession has subsided.
Mistake: Slashing or Raising Prices Excessively
Making excessive price changes is almost a reflex for business owners during a recession. In their panic, people tend to try and appease their customers or make up for losses in the short-term. The important thing is to understand that a recession may take several months or more to resolve itself.
Returning an economy to recovery status takes time and you need to make your response to the downturn an appropriate one. Slashing prices can reduce your brand equity as customers will associate your products and services with common commodities. Also, imagine being in a tough spot due to a recession and then reducing your income. Not a good move. Raising your prices to make up for losses amidst a recession will also drive people away.
Instead: Focus on Relationship-Building
Maybe with the mix of products or services you offer, price-cutting is the only avenue you have in a recession. In that case, you need to try to make it about value. If you find that your competitors are getting into a price war, avoid this at all costs.
Instead, offer multiple-visit discounts if you’re a dentist or offer to help in other aspects of a deal if you’re a realtor. Any discount you offer should be associated with adding value rather than reducing the importance of your product or service.
People continue to offer their patronage to businesses they trust. If you can show that you care for your clientele, you can avoid having to make devastating price cuts. Build meaningful relationships with your customers and you will keep most of them coming back while adding new patrons to your list.
There are simple yet powerful ways to accomplish this. Try sending thoughtful postcards to your customers. Finding the right vendor is hard but one company that has tons of these types of postcard templates is Wise Pelican and you can have them create a heartfelt message. Rather than a sales pitch, make it about how your business is there to help your customers with their pain-points.
A slightly pricier, yet effective, method is to send your past or best clients a care package. This will catch them off guard in the best way possible. You don’t have to break the bank with this method. If done properly, care packages can result in a windfall of sales. Also, if your data tracking is on point, you can determine the return on investment and either expand the use of care packages or turn to a different relationship-building method.
Remember, your customers are feeling the recession too. A postcard or a care package can go a long way with them.
Take Advantage of a Downturn
One of the greatest favors you can do your business is changing your mentality. Look at a recession as an opportunity rather than a scary time where you withdraw into hiding. It may sound strange to approach a downturn this way but it’s simply a change of perspective.
Any business owner can do well during an economic boom. Not every entrepreneur can turn a downturn into a growth opportunity. Change your mindset and try to scan your niche like an opportunity-seeking robot. However, don’t just focus on the mechanics but put your creativity to work.
Understand that most small and medium enterprises go into defensive mode when a recession hits. The mere fact that you have a growth-minded outlook will cause you to spot opportunities seemingly out of nowhere.
Make Your Business Essential for Your Clients
Services are the first thing people will try and cut out of their family budgets during a recession. You can counteract this by educating your audience about the quality of your work and by fostering meaningful relationships.
Try and employ some emotional intelligence when dealing with prospective clients. Show them that you understand that they are may be in a squeeze by offering them the highest possible value. Convince your customers that you’re the best choice for helping them achieve their goals in the middle of a recession.
