Written by: Connor Dales, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
With rising inflation and interest rates at levels not seen in over 40 years and the prolonged covid-19 pandemic that cost us greatly in human life and unintended financial consequences. The current global economic crisis is starting to become one of the most difficult events in nearly half a century. That said, that’s no excuse or reason to be paralyzed by fear, anxiety, pessimism, and the great ominous unknown. Just accept it as the new reality and continue going forward.
In past recessions, naturally, many businesses failed, but the fact is that quite a few survived (many new innovative ones were created) and even thrived. How is that possible? Because in tough times, great endeavors and companies have the chance to rise above the noise and discord. The strong, smartest, most efficient, and most agile companies will survive amid the chaotic times.
For example, Google raised capital following the Dot-com bubble and grew in the downturn. Uber also enjoyed a similar trajectory in the 2008-09 recession, and of course, Zoom skyrocketed to fame and success during the economic downtown in the first year of the COVID-19 pandemic.
Now that we’re (mostly) putting the pandemic fears and lockdowns behind us, the global economy across all industries and sectors is now experiencing an extended period of market contraction. For instance, Tech has been dealt a heavy blow in this regard. As a result of high-interest rates and accelerated unsustainable growth, companies have had to belt tighten and think of ways to reduce costs fast. The most recent example of this is Shopify decreasing its current existing headcount by 10%. They overestimated the growth pattern trends for online shopping, with the sentiment being that ecommerce was going to be on a never-ending path of endless exponential growth and thus overstaffing in duplicate and other non-essential roles in turbulent market conditions.
Now, the question you need to ask yourself is: What are you made of? What’s your level of grit? Are you one of the victors, or will you be among those confused and hapless souls going down with their ship? If you’re reading this article, then I’m sure that you want to be one of the winners and succeed.
Almost 14 years have passed since the last major economic downturn, and as I mentioned above, the pandemic also saw the global economy sputter and freeze. This current crisis, however, is unique in many ways, such as the fact that it comes amid a global energy crisis and a new Cold War between Russia and NATO. Compounded by a global chip shortage which has caused consumer appliances, electronics like laptops and iPhones to go up in price, and most notably, to complement the high gas prices, used cars have gone up more than half in price. This puts a country like Taiwan in a leveraged position for dominant market share as it’s one of the top countries in the world that manufactures and distributes semiconductors for almost everything we use in day-to-day life.
Below is a list of 10 tips that I’ve composed for you to function as a sort of roadmap as you adapt and evolve to the new economic environment. Of course, every company is unique and faces different circumstances. So, please note that this is not a one-fits-all solution. Take the parts that pertain to your business and needs. Adjust it based on your industry model to fit new and existing demands. I hope it helps you to ride the violent waves.
Get pumped up to outperform the competition
During a recession, your competitors are an even greater threat to your survival and prosperity. Be creative and find opportunities. Look for ways to win more customers away from your competitors. Try to differentiate your brand in a meaningful way — maybe lower your prices, provide better quality products or service, or overall make a better customer experience. Stand out in various ways that really matter to your target audience and which will secure their trust and enhance your credibility. If you don’t have a loyalty and referral program already, then certainly start one.
Trim expenses
Slash or entirely remove secondary and non-essential expenses. For example, you might want a moratorium on business travel since that often leads to many other extra bills. Or have your workforce go remote or even adopt the hybrid model of work. Next, decide which employees are crucial to your operation and who is less vital. This process is hard for obvious reasons, so to ensure relations aren’t strained, sit down with that employee and be honest about the circumstances and do what you can to offer support as they transition out, such as offer a generous severance package or educational resources that involve them taking classes and courses to help them upskill and new skill development for future work opportunities. Digital tools can replace extraneous employees. Or perhaps one excellent employee can do the work of three. Also, ask suppliers for discounts in return for loyalty.
Prioritize your investment strategy
After you understand where you can cut costs, make sure that you know where you should not cut and where you need to invest so you can grow sustainably. Then, come up with a strategy to deal with this period of austerity. Remember, you still NEED to grow as a business. You can’t be intimidated by the economic crisis. What are your strategic objectives and goals? Do you absolutely need to invest in R&D, or what about Marketing and PR? Long-term branding, PR, and marketing strategies, such as social media, might not pay off immediately, but they have a much higher return on investment (ROI) than short-term strategies. When the economy picks up again, you’ll have the chance to gain a bigger share of the market than you never thought possible.
Diversify revenue streams
Increase your chances of survival by diversifying revenue streams. For the short-term, create new means of generating income; this way, if the recession wipes out one revenue stream, you'll be supplemented with ample backups to keep your business afloat. Minimize risk by having plenty of options. For example, you could start selling new types of goods, start a blog with advertising or an online course or program or offer new services to your customers. This is only a temporary measure because, ideally, you should focus on your core business activity.
Be creative with capital
Fundraise with a more cautious plan than you did previously. Show a path to profitability and convince existing investors to set aside more money if needed. It’s better to raise money at a low valuation than to go bankrupt. Startups, for example, should consider alternatives to the VC funding model. One option is revenue-based financing. Under this model, startups can raise capital from a financier who claims a percentage of their future revenue. Another option is venture lending, which is a type of loan offered by commercial private banks and nonbank lenders that is designed specifically for early-stage, high-growth companies with venture capital backing. While this option isn’t best suited for those businesses undercapitalized, it serves as I viable option for companies who don’t want to dilute themselves out of existence.
Build a team — contractors & freelancers
Freelancers are less expensive than full-time workers who expect benefits. In contrast, a recent study found that 67% of freelancers preferred better salaries and fewer benefits; they value and thrive on being independent and versatile. The portion of full-time freelancers in the U.S. has climbed from 17% in 2014 to 28% in 2019. Today, there are 57 million freelancers in the U.S. This option allows you to tap into excellent labor opportunities at minimum cost and headache.
Now, that doesn’t mean employees aren’t valuable and worthy. Having the proper incentives they desire goes beyond paying them more money. An increased salary is just only one of the critical incentives that earn their loyalty and tenure. Allowing them a flexible work schedule where they can work remotely from home or an independent location while managing the expectations of when they need to be on company premises (for those businesses that have a physical HQ), giving them more autonomy through added responsibilities and empowered leadership will indicate a deeper level of trust between you and your employees when they go above and beyond in their roles reward them through promotion and doing challenges for prizes. Most of all, what’s always overlooked is simply acknowledging them for their hard work and saying two magical words “thank you.”
Invest in education and ongoing professional development
Recession or not, continuous skill upgrades and learning are essential for staying relevant. Now, if you’re more cash-strapped than other business owners, you can turn to free resources such as YouTube or certain free courses on platforms like Udemy, Coursera, and LinkedIn Learning. Attend some evening workshops held at your local chamber of commerce and even the public library. Depending on what exactly is the gap in your business preventing you from moving forward, it may require you to take an accounting refresher course, digital marketing, and even design thinking which has become a skill growing in popularity and demand. Focus on what makes you most unique at doing what is your best and upskill yourself to have a leading competitive advantage.
Network, Network, Network
Networking during an economic downturn can be useful for understanding how other businesses are coping. You may also discover new opportunities, customers & clients, staff, suppliers, and business partners with minimal cost to your business. Attending professional business events through Meetup, Toastmasters, and BNI networking groups is a wonderful no-cost to a minimal-cost way of expanding your visibility and sphere of influence.
Going to regular trade associations, conferences and other event types is great as well. If you are able to do so, start your own series of networking events, or if you lack the bandwidth to do it alone, partner with someone who’s well experienced in doing this you’ll be able to leverage their own network for your benefit as well.
You could also charge attendees to access and attend such events, which makes a great revenue-generating stream once you get enough traction and demand for more events. Gradually over time, you can increase those ticket prices by featuring and inviting special guest speakers and experts to talk about specific hot topics.
Consider forming alliances with other businesses, for example, by offering complementary services and discounts.
Automate your systems and processes
Apart from the commonsense element, if you plan on successfully surviving (and thriving) in your business as well as the ongoing economic climate, then it’s vital that you have well-formed habits of meticulous process documentation down to an art form and scientific method. Easy yet overlooked examples like keeping track of what activities are in your calendar or planner, such as client and team meetings or traveling to specific events.
Organizing and prioritizing which emails are urgent that take priority over important ones that aren’t as time-sensitive. This prevents clutter and bottleneck bulk build-up in your inbox. Small and medium-sized businesses now have more opportunities to strategically automate critical areas of their operations. By using these technologies, you can grow your business. By lowering costs, optimizing processes, minimizing human errors, and improving productivity, you’ll be able to improve your bottom line and drive profit growth.
Here are just a few of the key ways that automation technologies will benefit your small or medium-sized business:
Automate repetitive tasks
Optimize your internal processes
Reduce human error
Cost savings
Improved marketing initiatives
Enhance the roles of your employee
Improve collaboration
Increase employee satisfaction
Deliver a super customer experience (CX)
And much more!
How can I automate my small business’s processes?
There is a wide range of operational processes that you can automate, but here I’ve listed the top five simplest ways to implement automation into your processes so you can get the ball rolling.
1 - Automate invoicing requirements
Approving, managing, and monitoring invoice payments is a cumbersome and time-consuming process. You can ensure this process runs seamlessly on time and have more control over business costs by automating your invoicing requirements. This includes everything from costs associated with fixed assets, expenses, full-time employees, billed tasks and much more.
2 - Automate your marketing initiatives
Marketing is a broad category, and it takes time to create assets, manage your program and analyze performance. Marketing automation tools can make this process easier and give you greater control over your program. Through technology, you can automate anything from lead generation, social media posts and email marketing.
3 - Automate your internal operations
Automating your business operations is a fantastic way to boost the efficiency of your entire organization. Automating your workflow will help you to seamlessly delegate tasks, manage projects, streamline communications and much more. This helps your entire team to work more efficiently and effectively.
4 - Automate your sales process
Want to focus on profits? Then you need to enhance your sales team to make more sales. Automating your sales processes is a fantastic way to let your sales team know where a customer is in the sales funnel. Automation tools can tell your sales team at the exact moment a prospect has reached the buying point, helping your small to medium-sized business increase profits.
5 - Automate your quality assurance
Most companies have some form of quality assurance (QA) step in place, ensuring complete satisfaction for their customers. The problem is, that QA can be subjective and human errors can easily occur during the process, resulting in inconsistent end products. By automating this process, you can feel confident that your own quality measurement standards are being met for your products or services.
To best understand what automation technologies your business needs, you should start by evaluating your internal processes. This will give you an idea of the areas in which you use the most time and resources to complete and where you’ll gain the most efficiencies and money savings.
Believe in the future
Finally, even if your situation looks bleak, continue to focus on the long-term and believe that you’re going to make it. Don’t get down on yourself. Chances are that you’ll pull through, provided you play to your strengths and leverage resources around you that focus on the areas you don’t excel in. If you’ve been able to cut costs to a reasonable level and as long as you’re not bleeding piles of cash, continue to go forward and hang in there. Eventually, many of your competitors won’t have that stamina and they’ll fold, and you’ll be one of the few still standing.
Good luck, be uncompromising in your resilience, ride that wave and enjoy the ride! It might be bumpy, but we will make it!
Connor Dales, Executive Contributor Brainz Magazine
Connor Dales, is a serial entrepreneur, business coach-consultant and a leader in leveraging systems for small, medium, and large sized businesses in addition to serving its owners by facilitating and cultivating strong leadership growth. He's an accredited ICF Certified Coach and has a wealth of knowledge and experience in business and personal/professional development. Connor is passionately committed to ensuring business owners and their teams breakthrough their bottlenecks and challenges to maximize their profitability and elevate their levels of impact! He is the founder of Meta View Coaching Solutions, a coaching-consulting company and online education business on a mission to transform companies from ordinary to extraordinary.
