Nobody likes to think about a recession. But with the climate of things going on in the world, I think we could all agree that we are headed that way fast. And recession means fewer people buying and more people watching prices in a hurry.
Never good news for a small business. Yet some businesses seem to press on like nothing is happening. The recession seemly does not even affect them.
Have you ever wondered why some small businesses seem to thrive in down times? This ability seems to be unrelated to the product or offer they have. So, what makes it possible?
While I can’t say for sure there is a formula, this article contains some of my thoughts on how those businesses manage to pull it off. If nothing else, hopefully, it will help you get some thoughts going on how you can prepare your business before we reach the cliff.
A slimmer business
Expenses are a given in any business. And when a recession hits hard, we all pull back on the reigns. It’s not the time for extravagant spending. Every purchase should be thought out.
Many small business owners are looking for things they can cut. Lower the bills. This is totally normal and should be something you are doing recession or not. But not every business reviews the benefits of an expense line before deciding what to cut.
Hopefully, you have been keeping track of what costs are going out for your marketing and how much those streams of marketing are returning to your business. This is a good spot to start. But you can’t always see hard numbers for how something is converting in your marketing.
When you start to look at the numbers, make sure you are considering the entire journey that each buyer makes. For example, in my business, I tend to receive more email leads than social media connections.
If I ran ads on social, which I do from time to time, then I could assume that the ads are doing nothing and drop them. But when I look at the entire journey, the lead that reached out over email or website form started following me months back on social.
They have been quietly nurtured in the background. You might have even found this article on social media. In this case, I would be justified in keeping ads running during a downturn.
The point is you need to not only look at today but at the future. If you see lots of word-of-mouth referrals to your cleaning business, you might think you don’t need any other marketing at all. But what happens when those leads dry up?
Don’t choose to cut marketing first. Keep your website up to date. Stay active on social media.
I strongly believe we should run lean businesses. But don’t shut down so far that you hurt yourself in the long run.
Review your product lines
To prepare for coming changes it is necessary to review what you are already offering. This follows one of two paths, and both can help strengthen your position.
Removing dead weight
Review all your existing products and look for any that are not selling well. Can these products be easily removed without hurting your other lines? You don’t want to remove complementary products that look like they don’t sell but are good upsells.
Go over the numbers and see what you can trim off. Make sure that each product or offering has enough margin. Remember, inflation is increasing your costs too. You don’t want to end up selling things for nothing.
Add complementing items
The second way to review your product offerings is to look for openings in your current ones. Can you find space in your existing line that would be a great help to your ideal customers and that aligns well with what you already have?
This is something I recently did in my business. I looked at the leads we received and more specifically those that might not have been the best fit due to their needs. What I found was I received leads that needed less offering (smaller websites in my case), and my lowest offering did not fit well in that case.
I choose to add another package to our lineup. This package contained fewer parts, and subsequently less cost. It was a good complementing offer to what we already did but opened us up to a larger market that previously did not need what we offered or could not afford the higher price.
There are likely areas in your business that could use another product and might serve to open the doors to people you never expected. And that might be enough to help you weather the storm.
Pivoting your business
Back in early 2020 when everything was shut down, we saw local restaurants in dire straits. They could not serve their food to the masses. They had little to no staff and items on the shelves going bad.
And at the same time, stores were struggling to get in some of the everyday products people needed as well. Critical things such as toilet paper.
The losses were adding up quickly. And yet some owners looked at it as an opportunity to serve. The best examples went something like this story.
A local restaurant owner whose business was equipped with a drive-up window realized that some of the very items that were out of stock in stores were still easy for him to purchase. The products came from two different manufacturing lines.
The savvy owner found that he could continue to order and allow people to use his drive-up to purchase the very items they could not find in the store. Flour was repacked into smaller bags, and toilet paper into smaller counts. And it worked.
While the owner did not turn a profit, his business is still here today despite many others closing. He served others and kept his staff employed. Sure, it was rough. But he pulled through.
You might have heard this story told slightly differently in your town. Many owners tried this same thing. The moral is don’t look for negatives, look for opportunities. Find ways to serve your community and the community will find ways to support you.
Is there some way you can pivot your business? Can you sell items you would not normally? Can you revisit how you serve your local community and fill a need instead of a niche?
Ask your existing customers
Some of the best feedback we will ever get will come from those we already serve. As you start to look at making changes to your business, take the time to ask your customers what they think.
If you are going to cut products, then you should review who is using those products. What else do they purchase from you? Can you reach out and see why they purchase that item? There might be a better offering you have or can have that would better solve their needs.
Your customers are also the perfect sounding board for what they want more of. Maybe they are currently shopping for a complementing offering and getting it from someone else. Could you offer that item and fill their needs all in one spot?
Send out a quick email. Reach out on social. Go where they are. Explain what you are looking to do with your business and ask for feedback. Not only will your customers and followers answer you, but you can also learn valuable insights from them.
Plus, people love to give their opinion. By allowing them to have input in your business, you are bringing them into the fold and making them feel more wanted. They will probably respond by spending more of their precious dollars with you as a thank you for including them.
Do you get the same request or question all the time? This could be a good indicator of something you need to address.
Take the time to go back through your notes and see if there are areas that your customers or even prospects are asking about that you can improve on. By improving your offering now, you are better prepared for anything that might be thrown at you in the future.
Try a pre-sale
The concept of pre-selling something is pretty common in the area of courses or concerts. But it can be applied to any business with the right amount of care and planning.
Whether you have an existing audience or are looking to reach a new one, you can plan out a new product and float it out there. See who responds and determine from that response if the product is worth creating.
If you choose to create a pre-sale, plan out how you will handle a failed launch. If no one purchases from you, no harm is done. Cut your losses and move on. But if you make sales and they don’t meet the minimum viable limit you set before your started, then you will either need to offer a reduced version or refund the few that did purchase your offering.
Think of a pre-sale as a kickstarted campaign. You have a great concept. You get people to either buy in or not. If enough people commit and the milestones are met, you can serve the offering. If the milestones are not met, you refund or offer something less that is acceptable to your buyers.
Using a pre-sale is also a great way to create a revenue stream without huge upfront costs. You only supply the product if enough people are interested. That leaves you in a position where you have not spent a ton of money to build something no one wants.
Prepare today & help local
The key to success in anything is planning. If you start planning today, you stand a better chance of surviving tomorrow.
Take some or all these ideas and start putting them to work in your business. Think about how you can serve your community and your customers. I have found that when you use your business to support those around you, they come back and support you in times of need.
We are all stronger together. Building communities and supporting each other gets us through tough times. Studies have shown that when people spend money locally, that money can float around the community way longer than a dollar spent at a big box store.
Use your power as a small business owner to keep those dollars local. Buy from other local shops. Source anything you can as close to home as possible. Keep your employees hired so they can keep spending locally. You never know who will purchase. Your employee’s daycare provider might pay rent to the landlord who just bought something from you yesterday.