20 Ways To Recession Proof Your Business

Recession is already here. Now more than ever, you need to take a step back from the daily grind of business and create a strategy to weather the impending recession storm.

Black clouds are already gathering but most business owners are so involved in the day-to-day business that they cannot see the horizon.

This reminds me of the opening scene from Les Miserables. A hundred men or more sing an upbeat song while pulling at large ropes. The men are over 30 deep in ranks. What they are pulling is a massive ship that dwarfs everything else in comparison. The ship being pulled in is the recession. All the men slaving to pull it in are the people running businesses.

Yes, a very dark vision. But that is the reality.

You as a founder or business owner must awaken your brand to ensure you are ready for the downslide of the economy and the resulting chaos that is unleashed.

Shore up your finances first

Cut down on non-essential expenses. Look carefully at where your money is going and see if you can cut out anything that is not giving you a positive ROI (but beware of cutting marketing, more on that below). Outsource where you can to reduce overhead. Consolidate SaaS subscriptions into fewer platforms. Pay yearly for subscriptions to gain discounts. Reduce business travel spend by planning ahead, which alone can cut 30% or more. Consider downsizing office space in favor of coworking or fully remote work.

If possible, shore up enough money to cover six months of expenses and marketing budget. If you cannot do six months, try for at least three. This buffer helps with cashflow during tricky months. If you do not have enough savings in the business, see if taking out a business loan at a low interest rate makes sense. Even if the money just sits in the bank, it is worth the extra expense to have it ready if things slow down drastically.

Get business insurance if you do not already have it. Not just indemnity and liability insurance but also business interruption insurance. Companies like Hiscox provide low-cost coverage, and it is an expense worth its weight in gold.

Increase your marketing, not decrease it

While everyone else cuts their marketing budget, you must do the opposite. Stop spending on the avocado toast but do not stop spending on marketing.

Spend more on refining your brand message and image, including brand strategy, visuals, website updates, and other brand touchpoints. Invest in content creation and social media marketing. And here is something most businesses do not realize: when times are bad, advertising platforms like Google Ads and Facebook reduce their CPM costs. Take advantage of the reduced costs to advertise more while competitors pull back.

Audit your marketing channels ruthlessly. When budget is limited, not all channels are created equal and each has strengths and weaknesses that affect your marketing. Identify the best channel for your business and focus your resources there.

Create a content base for your brand regardless of what kind of market segment you are in. Content can be anything from a blog on your website to a YouTube channel, a LinkedIn or Twitter business page, or an Instagram or TikTok profile. The content base is not about sales messages. It is about giving value to your target audience, and that value compounds over time.

Rethink your strategy and positioning

During a recession the mindset and thought process of your target audience will change. You must understand if your current brand positioning strategy stands up to changing audience sentiment. If you are too close to your strategy to see clearly, hire someone who can. This is one expense that is not really an expense.

Evaluate your customer avatars and buyer personas to ensure they reflect the changing emotion. Work on clarifying and simplifying your brand story to align with the audience. Ensure your brand messaging is on point and serves the positioning.

Audit your message to its core. If your current message works well in good times, it may not work during a recession. Your audience may be more receptive to a different kind of messaging. Figure this out. Do not continue with the same messaging that worked during the boom.

Rethink your core offers. Identify how the weak points of your sales funnel affect the conversion rate. Your offers may need to be tweaked or changed completely to accommodate the shifts in positioning, messaging, and funnel dynamics. Do not be afraid to drop unprofitable products or services.

When you tweak your core offers, it is a good opportunity to rethink pricing. A recession does not necessarily mean you have to reduce prices. It depends on your brand strategy and positioning. Sometimes when times are tough, the answer is to target high-ticket clients and increase prices.

Focus on the right customers

Think of the 80/20 principle. Typically 80% of your revenue is generated by 20% of your customers. Ensure that your positioning, messaging, offers, pricing, and sales funnel are all tuned to target those high-value customers.

Fire your bad customers. 80% of your customer service issues come from 20% of your customers. To focus on your best customers and allocate precious resources to providing the best service you can, let go of unreasonable or wrong-fit customers. You do not want to waste time on people who drain more than they contribute.

Turn up the heat on customer service for the customers you keep. You should be obsessed with service at any time, but more so during a recession when acquiring new customers is harder. Nurture existing customers to create repeat sales and word-of-mouth marketing for your brand. Turn your customers into fans through your service.

Build operational resilience

Figure out bottlenecks in your business. Typically the biggest one is getting leads that convert. Analyze how you are getting your leads, identify the weak points of that funnel, and ask whether that chain could break when the recession hits. Where are your leads coming from? What is your cost of acquisition? Do you have a lead pool with a steady supply of targeted leads? Review your sales pitches to ensure there is no friction.

Come up with systems to optimize each part of your business, systems that can be tweaked to become efficient as conditions change.

Be flexible enough to pivot if required. Do not let pride, stubbornness, or tradition get in the way of survival. Be ready to try everything and pivot if needed to go with something completely outside your comfort zone. Success is usually all down to how you think about things.

Look at multiple channels of revenue. Now is a great time to see if you can diversify your revenue streams. It takes time to get an idea off the ground before it starts making money, and the earlier you put thought into those ideas the better.

Look for partnerships. Reach out to potential partners that either complement your service or add value to it. You should even consider partnering with competitors to create win-win scenarios. A great example is Calle Laurel street in Logrono, the capital of the Rioja wine region of Spain. Crammed into this one single street are over 50 tapas bars. On the surface you might think these 50 bars would be fiercely competing, but they have worked out a way to make everyone win. Each bar specializes in two or three tapas specialties. Patrons go from bar to bar on a pintxos crawl tasting different kinds, and every bar gets business.

Reinvent your product or service if needed. Changing mindsets and emotional landscapes during a recession may mean your product-market fit buckles under pressure. Think outside the box to see if your product or service needs reinvention to align with the changing tide. This is what TOMS did to tackle an eight-year decline. They modernized their brand, changed their messaging, redesigned their brand and website, and most importantly redesigned their signature shoe to be more modern and comfortable. Although they were not focused solely on recession-proofing, it is always a great time to be reinventing.