Did you know that the nearly 100,000 small businesses that shut down temporarily during 2020’s economic slump caused by the pandemic are now out of business?
It’s a scary statistic to hear, but the reality is there are things your small business can do to avoid being another statistic. We’re here to help with tips about how you can be proactive to keep your small business afloat.
While Bloomberg predicts that there is a 72% probability of a recession, there won’t be a sudden halt to the global economy. However, we may experience an economic downturn or slowdown, and it’s worth thinking about how you could be impacted. How can your small business thrive during it and beyond?
Below are actionable tips you can implement to keep your small business together and even see some great wins in 2024.
1. Conduct a Cash-Flow Analysis
Knowing how money comes in and goes out of your business allows you to identify needless expenses that can be eliminated and focus instead on revenue-generating activities. You can:
- Scan your budget for unnecessary spending. Are there products and services your small business will do fine without?
- If you use software or services that require subscription packages, review to see the ones you can consolidate to serve the same purpose or alternatives that don’t cost as much.
- Look for opportunities to renegotiate prices and terms of some of the services you use as part of business operations.
2. Focus on Building and Nurturing Customer Relationships
A strong relationship with your customers can foster brand connection and loyalty, which boosts customer retention and increases the possibility of repeat purchases. Hence, you should focus on building and nurturing relationships with your customers and providing excellent customer support.
In a PWC study, 73% of consumers say that customer experience is an important factor in choosing businesses to purchase from, yet only 49% of consumers in the U.S. agreed to have had good customer experiences with businesses.
Give your business an edge by prioritizing your customers, making them feel seen and heard, and looking to help them solve their problems with your products and services. A great tool to help with this is your small business CRM. It helps you recall previous experiences with clients and access as much information about them as possible, including how they’ve previously interacted with your team and content. With all that data, you can draw insights and make informed decisions about possible ways to give tailored care that will improve your customer relationships, build trust, and encourage future business.
3. Save and Explore Multiple Financial Options
One of the ways to thrive when there’s an economic downturn is to be proactive rather than reactive. If you have not started saving yet, begin to do so now. Inculcate the habit of setting aside a certain percentage of your income in a savings or separate account. Your savings may come in handy during an economic downturn.
Also, consider applying for low-risk loans and grants ahead of time. It’s easier to look for other ways of financing your business now that there is stability rather than waiting until you feel threatened by a recession. Work on getting a loan approval or business grants that may serve as reinforcements for your business.
Websites like The Small Business Administration (SBA) and Grant.gov are committed to helping small businesses overcome challenges. This includes sourcing for loans, active grant programs, and grant eligibility.
4. Invest in Marketing
While the ultimate goal of marketing is sales, it also helps you understand your target audience better, gives you better business reach and visibility, and maintains brand trust, which keeps your customers interested in your products and services.
Some businesses will be cutting down marketing budgets and reducing their marketing strategies to stay lean. This means fewer players in the advertising space, which may translate to lower ads cost and less competition. Take advantage of the lack of stiff competition to drive benefits for your own business.
Take time to study optimal marketing channels that drive the best results for your business. For example, email marketing remains the most effective marketing channel for small businesses. It provides an impressive ROI, and owning your email list means you have more liberties when it comes to utilizing it.
5. Focus on the Most Profitable Part of Your Business
You may have brilliant ideas about new products whilst also desiring to keep older products on the shelf, but you cannot afford to keep pumping resources into products/services that do not bring in revenue for your business.
Assess your products and services, and identify the ones that are thriving and the ones that are barely surviving. Are there ways to improve the non-performing ones and improve sales? If yes, spring into action. If not, do not feel guilty about letting them go.
You can trim your budget and product expenditure and keep expenses lean by focusing on products/services that are thriving in the market.
6. Use Marketing Automation
One of the game-changing factors for businesses to thrive during an economic downturn is to focus on growth and think long-term, not just on cutting down on business expenses and focusing on short-term struggles. If you can balance both as a small business owner, that is a big win, and that is what marketing automation can do for you.
With the right marketing tool, you can take advantage of marketing automation to automate repetitive tasks without spending extra effort and resources. You can increase efficiency, increase conversion rates, keep track of your clientele, and get accurate reports for your activities.
Implementing marketing automation helps you save costs while improving your business’s workflow. Having saved the extra work from doing the same tasks repetitively, you can begin to look at other aspects of your business and devote time to other areas for the success of your small business long term.
Harvard Business Review’s study of U.S. public companies with greater than $50 million in annual sales across the last four economic downturns saw that 14% of these companies reported accelerated growth and profitability. The deciding factors – acting early, planning, and being prepared. You can get proactive; position your business for success, and the economic downturn won’t spell the end for your small business.