Survival Strategies for a Recession

Depending on your perspective, the world is experiencing an economic downturn, a slump, or a slowdown. No one is using the “R” word yet. But the reality is that the sooner you start thinking about your business from a recession perspective, the sooner you will be in a better position to keep your business healthy.

As Frank Luntz points out in his best selling book Words That Work, “It’s not what you say, it’s what people hear.” When it comes to consumer spending, people are hearing something much more serious than economic downturn. Companies of all sizes, in all markets, and all countries are seeing sales drop in double digits.

Two questions you should ask yourself are:

1. How do you continue to sell your goods and services when people stop spending?
2. How should you change your strategies to stay as financially viable as possible during a bad economy?

Here are the answers that will help you formulate strategies for smart advertising, management, and development during bad economic times.

Advertising

Forget about clever advertising. Instead of entertaining customers, make them smarter. Create advertising that quickly and simply informs them about how your product or service will help them through their tough times.

Don’t focus on sales and discounts. That’s what everyone else is doing and you’ll get into a price war you can’t win. Of course you can, and should, continue to make special offers. Also, look for added values you can provide when a purchase is made that will help ease some other economic challenge for your customers.

Target as tightly as possible. In tough economies look for the people who have the most urgent need for what you sell and focus your marketing to reach them. Find your niches and take ownership of them.

Measure everything you do. When markets are productive and most or all media sources are effective, it’s easy to stop measuring your results. In bad economies it is essential that you measure the return on every dollar you spend so that you get the maximum benefit from your ad dollars.

Don’t stop advertising. It is tempting for companies to cut ad dollars, but too much cutting will create the outcome you are trying to avoid. Henry Ford said “you can’t make more money by stopping your advertising any more than you can make more time by stopping your clock.” You need to still be a player in the market when the market bounces back.

Include E-commerce. In the seven years since the post 9/11 bust, the changes in the way consumers use their computers have been enormous. For many consumer groups the computer is their #1 media source — ranking higher than TV, magazines, radio, or newspapers. Use the Internet and Web effectively. If you can’t actually sell on line, use the medium for advertising and communication with customers. Be sure you maximize the effectiveness of your Website for searches and visits.

Management

Get rid of dead weight. In tough times you will most likely be faced with employee layoffs. Consider carefully whom you keep. An economic downturn can be the ideal time to get rid of unproductive, complacent, and mediocre employees who are preventing you from operating at peak efficiency. Keep those who give 100%, have positive attitudes, and get things done instead of making excuses.

Outsource when you can. If a decrease in business volume makes it difficult to justify some of your overhead, look at areas where you could eliminate high overhead by outsourcing and have those tasks done on a for-hire basis.

Control your purchasing and inventory. Now is not the time to have shelves and rooms full of inventory. From merchandise you are reselling to your own office supplies, buy only what you need as you need it.

Cut out the frills. Perks and parties can be part of the fun of your corporate culture. But when sales are down and profits shrink, you need to focus on the necessities. Look for more frugal ways to maintain a fun atmosphere where people can be productive and enjoy coming to work.

Development

Hopefully you took advantage of those years when your sales were good to pile up some financial cushions and maintain a secure line of credit with your financial institution. Now is the time to use those resources wisely.

Look for expansion opportunities. There are many bargains to be had in slow economies. Other business owners may be willing to sell at a price that makes it easy for you to double your market size or expand into a new market. Your payoff may not be immediate, but when the economy recovers, which it always does, you’ll be in a great position.

Add new products and services. By providing more value to your current loyal customers through new products and services, you can maintain your relationships during slow times by being of even more benefit to them now. And, you’ll have expanded opportunities to reach out to a broader base of new customers.

Improve customer service and amenities. Sometimes the most effective things to do actually cost very little. Evaluate your customer service. Look for ways to make it better. Improve your customer’s experience in doing business with you. A little improvement can help you in a big way in attracting customers from your competitors. Just by being a little friendlier, a little easier, and a little more appreciative to do business with, you can make more people choose to do business with you.

As many of you know, I just returned from being out of the country for the past two weeks. During that time I had an opportunity to talk with people from many types of industries and many countries, listen to economic news from world markets and get a look at the economic situation from a truly global perspective. It is easy to see how “one sneeze in America can make the whole world catch a cold.” It has. Let’s all hope we find a cure for the cold really soon.

© Copyright 2010, Excelsior Marketing, Inc. All Rights Reserved.