Over the last six to twelve months, conversations have sparked a discussion around a potential downturn in the U.S. economy. Depending on who you talk to, some would say that we are already in a recession. Whereas others would argue we’re heading towards one, but are not quite in a recession yet. Regardless, the indicators are evident, and we as small business owners must prepare.
The real estate industry has begun to show a dip in sales and an increase in interest rates for home buyers. Unemployment rates have also increased over the last few months, encouraging small business owners and the employed to tighten their belts as inflation continues to rise and the US economy continues to take a hit. Whether we’re in the beginnings of our next recession or on the verge of one, there are quick steps individuals can take to ensure survival throughout the crash.
Analyze your cash reserves to ensure that your business is not operating on month-to-month income. You should set aside funds to prepare for the unexpected, whether it is a change in the economy or an unexpected business expense. A good rule of thumb is to have 6 months reserve to supplement active expenditure in the event you are affected by the recession, or any other unforeseen circumstance.
Trim the Fat
Trimming the fat doesn’t automatically equate to getting rid of your staff. However, it does mean that you should analyze the areas of your business that are yielding the highest level of productivity and direct your resources in that direction. Areas that are low yielding should be tabled or removed from your current budget. Consider preserving your talent by redirecting them to more profitable and effective areas.
It costs five times more to acquire a new customer than it costs to keep an existing customer, which can require extensive support behind your business’ development. However, when you’re in a slow pacing economy, it is vital you focus on the importance of nurturing and retaining the customers you do have. Evaluate your competitive advantages and find cost efficient rewards to ensure that your clients are receiving white glove treatment. Here are some ways to engage your customers and stabilize retention through the recession:
Nurture existing relationships. This just means giving your customers a little more TLC. Let them know that you care. Send a monthly email nurture newsletter to your customers and consider including a customer spotlight to highly their business and their successes. Pick up the phone and give them a call. You’d be surprised how much your customers will appreciate a little bit of human connection with a simple conversation. A lost art these days is sending a handwritten greeting card. Drop a note in the mail to show them you appreciate their business.
Create a new bonus product that will benefit your customers’ business. Offer specialized pricing to your customers only, giving them exclusive access. Offer focus groups to evaluate their needs, and to let them know you care and are committed to meeting their needs.
Offer complimentary training and resources. Build an exclusive community with your customers, showing them value in being partnered with your business.
Create loyalty rewards and recognition with your customers. Reward their tenure with cash rewards, discounts, or free products. Not only will a program like this retain your customers but it might also drive referrals.
Show compassion. Offer payment plans for services or even deferred billing, if you can, to show your customers that we are in this together.
When the environment around us changes, so do the needs of our customers. Change encourages innovation which creates new revenue streams. Throughout the pandemic, new communication methods were birthed, and new business concepts emerged in ways to actively contribute to the ‘new work normal’.
Partner with Other Businesses
You don’t have to be everything to everybody. Hire other businesses offering complimentary services to allow you to re-focus your resources on more integral parts of your business. Partnering with other businesses will expand your reach and share marketing costs while growing your revenue.
Build your Team Culture
Now is a good time to evaluate internal processes for long-term improvements, including your team culture. What can you do to become the best at what you do and attract the best people? We’ve already mentioned the importance of client retention during a recession, but part of that requires leveling up the quality of service you are offering. That begins with your client touchpoints – your team. By cultivating and fostering a healthy team environment, you are also encouraging and nurturing a healthy customer base.
The flux of our economy is a natural economic process. The recession will not last forever, but it is important to be prepared and take the necessary steps to ensure the survival of your business through economic instability.
A big part of your business growth and development is working with experienced partners with a vested interest in your success. VAAS Professionals has 20 years of experience in working with small businesses to develop their business and help them reach their financial goals. Consider working with a partner that is committed to your success through the recession.