Recession. We don’t like the word and we don’t want the reality, but it may be in our collective future. As a leader, you need to anticipate that business may slow down in coming months due to inflation and recession. If you are a younger leader, you may never have experienced a recession. If you are an older leader, it’s been a while since you faced one. While we have all been through the disruption caused by the pandemic, a recession and its effects could last much longer. Here are five ways to prepare so that your business is well-positioned to navigate through an economic slowdown if it does come.
First, discipline yourself to embrace reality. That means avoiding the extremes of both starry-eyed optimism and fatalistic pessimism. Be willing to honestly assess where your business and the economy is on an ongoing basis, taking care to avoid self-deception and confirmation bias. Look at the facts and accept them as facts. If the data in your business tells you that you are going strong, be glad but stay alert for any change. If your data suggests that things are slowing down, acknowledge the trend and carefully consider what action you may need to take.
Second, be in touch with your most important customers. Look for or create opportunities to get input from your customers so you can understand where they are at, what their needs are, and how you can best help them. This is a wise practice at any time, but it is crucial now so that you do not lose any revenue due to neglect or ignorance of your customers’ requirements and expectations.
If you are a B2B company, connecting with your customers is usually as straightforward as getting on the phone or making an in-person visit with your clients to have informal (but informative) conversations. If you are in the B2C space, you may not have personal relationships with your customers. If that is the case, carefully study the data you have with regard to the buying trends of your target customer set. Are those buying trends changing? Is purchasing activity decelerating? Are product or service choices shifting? Consider conducting focus groups or distributing surveys to get customer feedback, and pay close attention to what is said in the reviews you are getting online.
Third, be flexible and agile to respond to customer needs. What you hear from your customers may suggest areas of your business to modify, abandon, or intensify. For example, you might give additional payment or delivery options to adapt to a tightened economy. You could put certain product offerings on the back burner in order to promote others. You might conduct training for your customer service representatives to ensure an even higher level of customer satisfaction. The bottom line is that you want to do what is necessary so your customers continue to do business with you even in a slowdown.
Fourth, look for opportunities to broaden your reach within your target market. This is not about changing the definition of your target market; it is about asking if there is a way to reach more of your ideal set of customers. For instance, if you are a B2B company that currently has 20% market share within your target market, could you expand that to 22%? Even 25%? Challenge yourself to come up with new ideas for how to raise your profile and deepen your impact with your target market. Ideas may include marketing initiatives, personal networking, social media, thought leadership, new offerings, and more.
Fifth, seek ways to improve internal efficiencies. This is, of course, a never-ending journey for every company, but it is vital to do when confronted with a possible recession. One of the best ways to streamline and enhance operations is to engage your team members and ask for their ideas. Give them permission – and incentive – to come forward with any and all ideas. Then, give each one due consideration. There are legions of stories about people “in the trenches” who were able to identify opportunities for improvement that people higher up in the company might never have seen. Ideas don’t have to be huge or earthshaking, either. Put together a dozen or more small changes and it is amazing how much you can reduce costs and increase productivity to help protect your margins in a downturn.
We all hope that the threat of recession will dissipate. But regardless of the future, you can take steps today that will protect and strengthen your business for tomorrow. Don’t wait; the best time to prepare is always now.