10 Steps to SURVIVE and even GROW Your Business during a RECESSION
So you think your business got caught in an economic downturn and there's not much you can do about it? Well, think again! My article below should make it easier for you to change your attitude, strategy and your bottom-line.
Considering the ongoing economic downturn (dare I call it a recession?) we find ourselves in for some time now, one question I am being asked over and over is how business owners can survive during a recession (there, I said it). To me these are very interesting questions, especially since they are mostly born out of a feeling of understandable insecurity and uncertainty. Insecurity and uncertainty, however, are two of the main drivers that push an economy into a recession. Hence, on the flip side, a generous spread of positive attitude and confidence are some of the most important elements to a recovering economy.
Here's the great news: Not only can you survive a recession, you can even grow your business and thrive in a recession!!!
If you think I'm crazy hold off on passing your final judgement until the end of this article. I have personally built and even successfully sold businesses during downturns and recessions, and while it seems like an insurmountable challenge when you think about it in theory, once you're in the drivers seat and start to focus on what's important it becomes much clearer, easier and ultimately second nature to you. Trust me. If I can do it, so can you.
Below I've put together my personal short list of options to consider and implement to maximize your business growth, even if the economy turns down. People have paid me big bucks for this, but I feel that the economy needs more people who take immediate and massive action to turn it around. Are you ready? Ok, here we go. We're cutting all the bull**** and get down to what really matters during tough times. Here are my 10 rules to maximize your business growth, if the economy sucks (they also work during good times, btw):
- Ben's Rule #1: Actively Sell! Get back to the basics! Hunt for new business from new prospects. Don't make the mistake of waiting for prospects to find you! Pull out all the stops. Start cold calling! Feel uncomfortable about cold calling? Get over it! Losing your business is going to feel much worse! Sell - Sell - Sell! In a slow economy, you NEED to find business - don't wait for business to find you!
- Ben's Rule #2: Reinvent Yourself! Remember you talked about this for years? Now it's time to act! Increase your sales and marketing efforts, repackage your current offerings with new names and a lower price. Offer an automatic product or service upgrade (in features or units) with the new name or tie the new offering to a timed date. Use automatic renewals wherever you can. I have done this in several of my companies with massive success.
- Ben's Rule #3: Make It Easier To Buy From You! Feel the pinch of recession in your wallet? Well, so do your customers! Make it easier for them to pay you by offering extended payment terms. You can increase your price by 10-20% to offset the cost of not getting prepaid for your work, but this will make it easier for your buyers to buy.
- Ben's Rule #4: Network! I repeat, Network! Network! Network! Go to trade shows, conferences, mixers, chamber of commerce events, coffee klatches, even Tupperware® parties - whatever even remotely applies to your line of business - etc. to expand your rolodex, partnerships and subsequently reduce your acquisition costs per sale. In a poor economy, partner with other companies to increase your networking and lead generation success, which will ultimately lower your lead capture costs and increase your sales.
- Ben's Rule #5: Expand Your Horizon! Have a world map? Get it out of your kid's room and start looking at it! Take advantage of the global village. The sky is the limit! Widen your sales and customer geography. If your market is saturated or too hesitant because times are tough, expand beyond where you are right now to find more opportunities. In some countries the economy is flourishing right now!
- Ben's Rule #6: Spend Money! No, I'm not kidding. Yes, spend more $$$ on marketing during a recession! Marketing is definitely not a line item you want to cut back on now. If times are tough, spend more money. During a recession, the cost of marketing lead generation usually goes down because advertisers become desperate for business. Also, product cost might go down and volume discounts are suddenly much easier to get. Your supplier, who used to laugh at your earlier attempt to haggle, might suddenly be much more open to work with you - use your awareness of timing to your advantage.
- Ben's Rule #7: Renegotiate Your Cost! Yes, there is a time and place to save money. Renegotiate all your supplier contracts. Focus on reducing your COGS (cost of goods sold) and try to lock these new prices in for longer period of time so you get to enjoy lower COGS even once things turn around. What options do you have to drop production, labor or direct cost? Hey, we're in a recession, right? Once again, use that line and NEGOTIATE!
- Ben's Rule #8: Utilize Psychology! No, I don't (necessarily) mean you should talk to a shrink! Just be creative and educate yourself about consumer behavior and sales techniques. One good example for what you might get out of this: Generate three pricing levels for your products and service with the mid-level price being the targeted price you want to sell at. Here's where your reading comes in handy: Several studies have shown conclusively that buyers consistently purchase the middle price when offered three options. Use your knowledge to your advantage.
- Ben's Rule #9: Be Bold! A good example for this would be to make your suppliers and even customers (depending on your business) come to you instead of the other way around. A great way to effectively reduce your travel and expenses is to offer your prospects cash (i.e. $500 off their first invoice), if they travel to you and buy -- instead of you and/or your team going to them. This approach not only keeps your money in the bank, but it also helps you qualify prospects by making them take an action (they need to come to you) which gets them more vested in the deal.
- Ben's Rule #10: Add Value To Your Customer's Life! Show them that they're much better off with you/your product than without you/your product. Change your value proposition to focus on your customer's cost savings. To drive your prospects to buy during a recessionary time, you need to focus your product or service messaging on how your offering reduces their business costs, directly or indirectly. Make them love you and remind them of all the money they are saving with your product or service.
Don't focus on implementing all these rules. Pick one that you feel you can go for right away and stick to it. Take massive action and don't turn back. Set small and achievable goals. You will see success, which in turn will make you feel more successful. Oh, and don't be a victim! Repeat after me: "I will not be a victim of this recession!" Say it out loud whenever you feel tightness. Look at a recession as an opportunity! As some sort of wealth re-distribution. Wayne Dyer once said "if you change the way you look at things, the things you look at change." That holds very true especially when the going gets tough.
Think positive and understand that recessions are a natural part of an economic cycle. If you know how to act and react during a slow economy you will find that recessions also offer a tremendous number of opportunities. Still not quite convinced? Here is an example: Remember two years or so ago, when you looked at the stock market and saw GE trading at $40/share and you wished you would have gotten in at $20? Well, you could have picked up some GE shares for less than $6 just about a year or so ago (they're back up to $15 now, but still a bargain in my book). I'm not sure about you, but I call that one heck of an opportunity!
Opportunities are defined as possibilities due to a favorable combination of circumstances. GE's pricing was pushed down by the recession and investors selling their GE stock in fear of losing value. That is your combination of circumstances, which is needed to create an opportunity. Now, just as a recession is a natural part of an economic cycle, so is an expansion. It will happen and you know it! That is your possibility! Put both together and you should hear opportunity knocking on your door with a vengeance right now. Can you hear it? No? Ok, read this post again, then discuss it with your friends and fellow business owners and definitely let me know once you do hear the knocking. You ultimately will. I know you have it in you. I'm rooting for you!
Learn more about the author, Ben Neumann.
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