As the Coronavirus continues to spread throughout the world, governments have turned to social distancing and stay-at-home orders to stop the spread. Yet, doing so has severed the flow of goods, stalled markets, and is in the process of delivering a global recession.
The current COVID-19 crisis can have lasting impacts on all forms of business. However, there is some optimism surrounding the idea of a soon available vaccine or solution. If so, companies can see a rapid rebound. Secondly, businesses have a massive window of opportunity during this downturn to analyze, adapt to survive and even thrive during these times and beyond.
Here are a few ways your business can thrive in a recession. (This article will primarily focus on retail, wholesale, and manufacturing businesses)
No need to immediately swing into crisis mode by implementing policies that will reduce operating costs, lower headcount and preserve cash. Preventing your company from getting severely hurt or going under should not be your primary goal, but instead, make sure to look for new opportunities that arise. These opportunities could be a gateway to replace lost sales during this unprecedented time.
The key to successfully finding these opportunities lies in your ability to grasp an understanding of your business strategy inside and out. Recessions are wild cards and can unexpectedly flip contenders into market leaders.
The main reason for this is not many leaders have a plan to handle a black swan event like the COVID-19 crisis or even a possible recession. The most agile and resilient companies looking at long-term growth will be the businesses that overcome downturn and lay a foundation for continued success.
Identify new sales channels
If you are purely an online business, look into expanding across more channels. If you primarily sell through your online store, look into marketplaces such as Amazon or eBay to expand your product reach. If you are a retailer and predominantly offline, there is no better time to look into building and marketing your website than now! Take a look at the top 10 ways to increase online sales.
Increase market share
Recessions are an excellent time for businesses to capture market share. Companies that are burning a large cash flow to operate will struggle to keep their employees and inventory levels–making this a prime time for smaller and more cash-efficient businesses to take over while others are distracted.
Many will slow spending or even hibernate through the recession. Take a look at Lego—they expanded into the global markets by reaching Asia and increasing sales during a 2009 downturn and by the end of the recession, their profits soared by 63%.
Losses and gains are permanent
It is often a mistake to think that your business can endure losses, bounce back and recoup after the recession ends. According to a Bain & Company study, more than 70% of the market that lost their share in the 2001 downturn were not able to regain their positions.
To conclude, don’t panic and hibernate during a recession, but look at ways to improve your business strategy by finding pockets that show potential for an extra grab of market share. In the long-term, this will lead you to future success.
In the face of a recession, you may want to tighten your budget and stay put. However, one of the best ways to prepare for a downturn is to invest in technology. It takes time to research and implement a new system; when the economy is right, you are too busy trying to grow and will not have the necessary time. Take advantage of this time!
In this current COVID-19 climate, businesses need to turn to a digital solution to keep in touch with their customers as social distancing is being enforced everywhere.
So what does this look like for a product-selling business? It may involve working with your team to upgrade your solution. This downturn will give you the time to implement and get familiar with new technology, and when the economy picks up, you will be able to scale much faster.
Moving your accounting online
It takes a truly agile business to rise to the top during a recession. Unfortunately, if your books are disorganized, you may find yourself needing to do a lot of catch up work if you need to file taxes, apply for relief loans, or pitch to investors. A great way to bring significant efficiency to your tedious tasks is by using a cloud-based accounting software.
Here is an article about QuickBooks Online and why your business may need it.
Adding a new or improving your e-commerce store
It is absolutely essential for every business that sells goods to have a website—no matter what. In this day and age, buyers perform product research more than ever before. According to Retail Dive, 87% of the shoppers begin product research online and that is up from 71% the year before. If you are looking to go online or make the switch to a more robust eCommerce platform, here are a few of the benefits:
If you are looking into Shopify, learn more about the benefits.
Inventory management platform
For all retailers, wholesalers and manufacturers, inventory is the core of your business! Are you still using excel spreadsheets? Will it scale as your business tries to take off? In fact, poor inventory management is one of the main reasons why small businesses fail. Having a robust inventory management software is a strong key component to running an efficient and profitable business.
Check out our guide to picking the best inventory management software for your business, and signs that you will need to upgrade your current solution.
In summary, technology helps you cut costs and makes your business more transparent, more flexible, and more efficient.
Reflect on your inventory management practices during this quiet, downturn time. Having a correct solution is not enough—having quality practices along with a cloud-based software will enable your maximum business efficiency.
Lower inventory costs
As always, your business should look into lowering costs; during a recession, this becomes even more critical.
Reduce your inventory costs without sacrificing the quality of your goods or the convenience of your customers. Begin stocking more of your best-selling products, as well as looking into backordering or dropshipping.
Look into backordering and dropshipping
Backordering will reduce holding costs while allowing you to offer more customization to your customers. Learn more about backordering – definition and best practices.
Another way to reduce costs is Dropshipping, which is a way to fulfill your customer orders without you having to incur any upfront costs. The key is finding a reliable vendor because any delays with shipments will damage your reputation with your customers. Mastering dropshipping will reduce your shipping and warehousing costs significantly.
Benefit from the multiple ways your business can reduce costs without having cash tied up or having to sacrifice your business—your customer will not even notice a thing.
We’ve all heard the old saying: “a bird in the hand is worth two in the bush.” The “bird in the hand” is your customer; that person or business is an opportunity to generate more sales without incurring the costs of finding a new one. Typically, it can cost as much as five times to attract a new customer than to keep an existing one.
Here are a few ways you can focus on customers that have the potential for huge payoffs:
Ask for feedback
Feedback is one of the most valuable benefits customers can offer brands.
Instead of running expensive campaigns to understand how customers value your brand, talk to your customers to see what they like and don’t like. One example of how a business can achieve this is by sending emails to your customers to give you feedback in exchange for a discount on their next order.
It is much easier to have a customer buy from you again than you spending the marketing budget on finding a new customer. Create valuable and personal content to attract your customers back. Use this opportunity to upsell. For example, clothing brands can market accessories to the customers that have bought a specific product or a protein supplier can send emails to the customer to try different flavors.
Identifying new products and services
Take the time to study your customers. Identify their needs and how your business can solve them. Mold your business strategy around this; you could benefit even from just a little research. This could then mean using your new findings and strategy to develop new products or services or upgrade existing ones.
During this critical time, you must also be sure to always communicate with your employees. It’s okay to show them an overview of your books and cash flows. Don’t be afraid to say, “we all need to be 10% more efficient and 10% more productive or else none of us will have a job in 6 months.” Make sure to include them in the problem-solving process, and this will be enough to motivate them to give that extra effort during tough times. Some people might even surprise you with new ideas or work-ethic.
Keeping your business afloat during the current economic situation is difficult, but not impossible. Have realistic goals and plan for being in survival mode for a year or two—not just for a few months. When planning and cutting costs, think more in-depth than you may want to because it will be rough on team morale if you have to do this again in 6 months.
Do not let a recession stop you from improving your business. Instead of hibernating, take time to strategize to be more flexible, look for more opportunities and create a more impactful eCommerce shopping experience. Companies that use suggestions in this article to be prepared and proactive will be able to survive and thrive during and after the current downturn. In fact, they could even go from challengers to market champions.