More than one third of small businesses in the United States shut their doors because of the pandemic, and about 2.5 million people are still out of work because of company closures. These statistics are particularly troubling considering small businesses make up about 99 percent of the U.S. workforce, and many economists believe we are headed toward a global recession.
It is difficult enough to start and run a small business under normal economic conditions. So how are entrepreneurs and small companies supposed to survive in the face of extreme market volatility and rapidly changing consumer habits?
While there is no foolproof way to ride out a recession unscathed, there are certain strategies that can help small businesses retain and gain new customers despite a difficult economic climate. Here are five examples
Evaluate Cash Flow
The worst time to evaluate cash flow and cut expenses is when you are short on funds and need to make difficult sacrifices. Don’t wait until times are tough to take a hard look at where you could be optimizing your investments and reducing costs. Building out your business savings or diversifying your investments ahead of a recession will give you more margin when it’s time to tighten the belt.
Invest in Digital Marketing
Creating an online presence for your small business is one of the best uses of your marketing and advertising dollars. Internet usage went up during the pandemic, and trends show that consumers are actually more likely to be on their phones or computers during difficult social or economic times. Because digital marketing has such a low barrier to entry, it is easy to find affordable and effective ways to get eyes on your products or services—whether through a website, social media, blog, ads, or other.
Focus on Customer Service
Engaging with and listening to your customers is a powerful way to recession proof your business. Your audience’s needs will change over time, especially in the midst of an economic downturn. It is critical to be asking the right questions of your audience and understand how their needs and wants fluctuate. Establishing strong relationships with current customers will also help ensure customer loyalty and prevent them from switching to another company that promises better prices.
Many small businesses waste time, energy, and money on manual processes that could easily be automated. There are likely many regular business processes you encounter on a daily or weekly basis that could be streamlined, outsourced or automated. While this may require an upfront investment, such as purchasing software or learning a new tool, it will ultimately save your bottom line in the long run.
Flexibility is key when it comes to weathering an economic downturn or recession. If your small business is stuck in certain ways of doing things, and unable to evolve with the times, this opportunity may be your downfall. Companies that succeed and grow during a recession are those that can pivot when needed and be flexible in their approach, whether from a product, marketing, or customer service standpoint.