Blame COVID-19: the US officially entered a recession in February. I suspect that’s not news to you and your small business, as small businesses have been on the front line of this downturn, struggling to survive. In fact, since the shut-down, it’s estimated that over 100,000 small businesses have closed their doors for good. I don’t want you to be one of them, so here are ways to help ‘recession-proof’ your small business.
1. Get the word out to “shop small, shop local.”
In response to COVID, customers want to help their favorite small businesses succeed, but at any time, it’s critical to educate consumers about the importance of small businesses to their community. Work together with other small businesses in your community or industry to create special events, discounts, rewards. Right now, you can give American Express cardholders even more motivation to ‘shop small,’ as American Express announced on Monday a $200 million program giving cardholders $5 for every $10 charged at a small business, up to 10 times. That puts money in their pocket for shopping with you. American Express cardholders, enroll at ShopSmall.com.
2. Stay agile, move fast.
Businesses that survive are businesses that can change. Think about being mentally agile in your business the same way you think about being flexible in your body. If you just sit in the same position—never flexing your muscles, never exercising—you get stiff, old. If you want to survive both the current situation and long-term, you’ve got to stay flexible in terms of your own attitude.
3. Start lean, stay lean.
Right now every single penny counts in your business, so make sure you spend as little as possible to make each sale. In good times, you might buy in bulk to save money, but you can’t afford to have your money tied up in inventory now. Consider even the little things. For instance, many restaurants now must provide diners with non-reusable menus in response to COVID, so I’ve noticed some providing QR codes with links to online menus to reduce the number of paper menus they print.
4. Figure out how you’ll “pivot.”
Once you’ve embraced the necessity of change, your job as business owner or manager is to come up with the actual strategies to navigate your business as it makes course corrections. Notice I said “strategies,”—not just “strategy.” You’re likely going to have to try a lot of things to see what works. That means staying abreast of industry and local developments, experimenting, communicating these changes to your team in a way that helps them embrace, not resist, change.
5. Reduce the number of product or service offerings.
Now is not the time to have an extensive ‘menu’ of what you sell, especially if different offerings mean more inventory, more staff, different marketing expenses. Part of being lean is being focused. Concentrate on those offerings that sell the best and are the most profitable.
6. Be the less expensive alternative.
I’ve never advised small companies to compete primarily on price as that means you live on very small profit margins. That’s not what I’m talking about. Rather, it’s a matter of finding solutions for customers that are “good enough” because in recessionary times, customers are willing to try less costly—though different—ways to meet their needs. For instance, women who previously spent big bucks getting their hair dyed at salons are more willing to save money by coloring their hair themselves, giving a start-up company like Madison-Reed, which sells do-it-yourself hair color on a subscription basis, a huge boost. Are there products or services you can sell that are ‘almost-as-good’ but less expensive alternatives?
7. Develop counter-cyclical lines of business.
Right now is a good time to see what types of products or services customers buy in down economic times. Learn from this. As the economy picks up—and it will improve one day—be certain to keep some counter-cyclical offerings in your playbook, so you can thrive regardless of economic conditions.
Now, no business is completely ‘recession-proof,’ especially when virtually the entire economy shut down as it did starting in March. But whether you’re just trying to survive or want to grow, you can build in strategies to make your company less vulnerable to both the current downturn as well as long-term.
Copyright Rhonda Abrams, 2020
This article originally ran in USA Today on June 30, 2020