This was originally written and published for AllBusiness.
Headlines are bleak right now. The spread of the coronavirus has people in panic mode, and that is impacting small businesses. It seems entirely possible that we will soon be in the middle of a recession—and yet 44% of small businesses are not prepared for one.
Being unprepared can have disastrous consequences, especially for a business that feels every choppy wave of economic rise and fall sharply.
I was unprepared as a business owner for our last recession. I remember feeling like I was drowning: in fear, in bills, in uncertainty. I had no clue how to remedy the situation, and often it’s hard to do when you’re in the middle of economic decline.
Fortunately, I learned some serious lessons that I plan to implement this time around to stay afloat in my small business boat, and I hope you do, too.
1. Increase Your Marketing Efforts
It’s ironic, isn’t it? I run a marketing company, but I didn’t do enough marketing during the last recession. I’d been gliding along on referrals for the entirety of my business’s life, and suddenly, I found myself struggling to keep things going. Clients were dropping like flies because they couldn’t afford to invest in my services.
Yes, spending is down during a recession. Your sales may decline. But that is no reason to stop your marketing. In fact, you need to boost it in these times.
Why? You’re not necessarily marketing to get customers today. You’re marketing to stay top-of-mind with people so that down the road (hopefully not far down the road), they’ll come back and buy from you.
The good news is, you can do pretty decent marketing without a big budget. If you can’t afford to outsource, handle things like social media management, blog writing, and email marketing in-house.
2. Get Your Financial Ducks in a Row
If your revenue gets severely cut, what’s your plan to pay bills and employees? Do you have enough in reserve to make it through potentially several months of hard times?
If not, think about applying for financing now before you’re in dire straits. Even if you don’t need money now (and loathe the idea of having to pay interest on a loan you don’t need), there may come a day when you’ll be glad that you got approved for a loan or line of credit.
If you don’t end up needing the money, great. But having a financial product can also help you build your business credit, so it’s really win-win.
3. Examine Your Expenses
The time may come that you need to tighten your company’s belt. Look at all your expenses and trim anything that’s not necessary. It’s only temporary. But this exercise may also uncover some things you didn’t realize you were wasting money on, so you’ll streamline your expenses to focus on the essentials.
If you subscribe to software packages, see if you really need the level of service you’re at. You might do just fine with a cheaper (or free) plan, at least for a while.
If you get to the point where you can’t afford to keep staff on, consider asking them if they’re willing to work part-time on a temporary basis. Hire freelancers or contractors for what you need, and you’ll cut down on employee benefits costs.
4. Focus on Existing Customers
A recession typically isn’t a great time to attract new customers, so focus on the ones you’ve got. It’s those repeat customers who will see you through challenging times. They already know that the products or services you sell meet their needs. Now you just need to convince them that, even in a recession, they should buy from you.
Consider launching a loyalty program that rewards customers for buying more. Offer discounts and sales tailored to each customer’s interests and past purchases. Pay attention to the data you get from your marketing campaigns so you continually hit the mark.
5. See the Big Picture
I was at Costco the other day and was blown away with how many people were loading up on toilet paper. I almost bought some myself just because everyone else was, but then I remembered, I’m not a lemur. Right now, with the threat of coronavirus, people are freaking out. They’re thinking about the here and now (how will I manage in the bathroom if everything shuts down?!) but not the big picture.
The threat of this illness will pass. A recession will pass. It’s important that you take care of your here-and-now needs, but stay strong, knowing that your business will survive this.