Don’t panic. Recessions happen. If you create a plan and look for new creative opportunities, you may even come out better than before.
Take Netflix for example. They started as a DVD-by-mail service in the mid-2000s. When the Great Recession hit, many entertainment-related companies struggled to survive, but Netflix changed its model and attracted three million subscribers by the end of 2009 (and its stock price rose by 57 percent).
One of the reasons they were successful, was because they were able to become an alternative to cable and satellite TV services, which were much more expensive at the time. Consumers obviously preferred paying a fraction of that cost for similar entertainment value.
So don’t be afraid to change and evolve in order to survive (and thrive) during economic downturns. But here are a few tips to help you prepare for a recession.
1. CUT BACK ON UNNECESSARY EXPENSES
If you don’t absolutely need it, don’t buy it. Take a look at your finances and determine where you can trim some of the extra spending. If you’re seeing the signs of a recession, the sooner you cut expenses, the better. Put aside the money you save from cutting expenses early, so you have a reserve to rely on if you need it in the future.
2. INCREASE BUDGET FOR MARKETING
Now this might seem counter-intuitive after we just advised you to cut expenses. However, when a financial crisis hits, many businesses make the mistake of eliminating their marketing and advertising altogether. When businesses do this, it’s like taking the gas out of a car and expecting it to go the distance. Marketing can give you a competitive advantage to attract new customers and retain current ones.
3. CREATE AND FOLLOW A STRATEGIC PLAN
Even if you are a small business, you need to have a strategic plan if you want to survive a recession. If you don’t currently have one, now’s the time to create one. Ask yourself these questions:
What are the top priorities for the business in the next 3, 6, 9, 12 months?
What resources do we need to accomplish our strategy?
Who do we need to effectively execute on these plans?
What is the goal of our efforts?