Actually useful advice on adapting your business for the recession.

We’re all busy worrying about COVID, but some of us are starting to realize that – we’re very realistically moving into a pandemic induced recession.

In BC, we’ve already started to see lots of lay-offs. Businesses are struggling to find customers with everything put on hold and being uncertain.

I’ve been doing some research to come up with ideas on how to “recession-proof” my own business and results aren’t the most helpful.

Most existing advice is along the lines of:

Plan better
Save up
Optimize
Cut cost/reduce expenses

No duh?! This is bullshit advice, these are things that you should be doing with your business all the time. None of these really help businesses that are already caught up in the recession squeeze.

I’ve been thinking of some advice myself, and here are some things that I’ve thought up:

Change who your customers are.

Let me explain:

If you’re offering services/products that are non-essential. Customers are most likely to cut budget spend on your services as they fall into a survive-first mindset.

What is essential vs. non-essential?

If you’re B2C. Essential services during a recession would include:

Grocery
Mortgages/Loans/Banks
Childcare
Healthcare

Basically things that are on the bottom tier of Mazel’s Hierarchy of Needs.

If you’re B2B

Online tools.
Accounting/Payroll services
Agriculture businesses
Communication businesses

So if customers are likely to cut back on spending on your non-essential solution, what can you do? Go after different customers that are less likely to be affected by the recession. Target customers that work in (if B2C) or provide (if B2B) essential products/services.

Still don’t get the point? What might this look like:

Example A: If you are offering vacation packages as a tour company, you might change your marketing/ads to target people who are working in companies like Walmart, Amazon, Banks, Schools etc. instead of going after your existing customers who might be more readily impacted by the recession
Example B: If you are providing business consulting services to retail companies, you might pivot (possibly temporary pivot) to providing consulting services to help companies with transitioning to online business or providing consulting services to IT companies.

Though some of these may be temporary pivots that are specific to the COVID situation, here are some interesting examples:

Workout workaround: How gyms are getting themselves reclassified as ‘essential’
Junk removal company in Vancouver now offering sanitization services (not so much changing their customers, but instead responding to their needs).

Related to changing your customers: Diversify your revenue

Most businesses will notice that the Pareto Principle applies to them – 80% of their revenue comes from 20% of their biggest clients.

You’ll be lucky if one of your current anchor clients doesn’t leave you. The last thing you want to happen is to have the rug pulled from under you when they do.

It’s time to start either:

Finding more of those 20% type anchor clients.
Or getting more of those smaller clients.

This is not a time to be picky, take up small/medium projects that you might otherwise decline. You may choose to discount your services, but in exchange, set up an arrangement to share in the upside (some form of commission/revenue share/royalties). Work closely with these customers and help them get to a stage where they can thrive and become more profitable anchor clients for yourself.

Repurpose your team

I’ve been seeing this in a few places – developers running out of work to do, projects being put on hold, consultants sitting around etc.

DON’T take your pedal off sales & marketing. Now more than ever it’s important for them to continue with outreach, even if conversion is lower.
For anyone on the fulfilment side – developers, consultants, product engineers etc. that are sitting around with nothing to do because of a decrease in projects. This is their chance to do something that they may never have had the time to, have them build relationships with your existing customers:
- Get them to focus on customer service, retention, community building.
- Get them to know what’s working/not working with your current solution. This is the time to catch up on your technical debt and improve/fix your product.
- Have them better understand the new challenges that your customers are facing and help inform your possible pivot ideas.
- Get them to understand new patterns of behaviours that your customers are adopting, identify what will last post COVID situation and move to address them.

Communicate transparently and welcome initiatives from the bottom-up

Many leaders will shoulder the stress and anxiety of the business on their own. Forcing them to make tough decisions and lay-off employees as a last resort.

Offload that burden, get the team involved, there may be creative solutions that you’ve overlooked.

As an example (though it did not happen during a recession), we once worked with a company that was raising capital and very quickly running out of runway. They couldn’t make payroll the next month and were deciding how they could cut their expenses and reduce their payroll.

Upon our suggestion to speak to their team about it, the team ended up making a company-wide decision to not let anyone get laid-off.

Everyone who could, offered to take half a paycheck the next month.
Those who could not, banded together to propose an action plan to increase revenue (they ended up doubling revenue in the next month).

They ended up successfully surviving that cash crunch & raising capital.

Don’t react, Adapt

Some businesses are still clinging on to their old goals/objectives hoping that things will go back to normal. They won’t.

Yes, COVID will go away and virtual will eventually move back to in-person. But the recession is very real:

Instead of reacting to things as they are happening, plan ahead.

What will the new normal look like?
What challenges will my customers face?
How can I evolve or adapt my solutions to meet those needs?

Sorry, that’s all I could come up with at this point. Yours truly is still too inexperienced as an entrepreneur. This is the first recession I’m navigating after all.

If you have some other useful advice, I would really appreciate that you share it here for the benefit of the greater global entrepreneurship community.