The COVID-19 pandemic has delivered a gut punch to America’s small businesses. Research from the US Chamber of Commerce reveals that a quarter of small businesses have closed their doors, either permanently or temporarily, as a result of the crisis. Additionally, 40% of those businesses still open also plan to shut down soon.
Given the severity of the situation, many experts fear that a recession is on the horizon. Others argue that it’s already here. Regardless of the timeline, this recession has the potential to exacerbate the challenges already brought on by factors such as lockdowns, social distancing, and financial strain.
“The National Bureau of Economic Research, or NBER, does not define a recession in terms of 2 consecutive quarters of decline in real GDP,” explains a financial report from Forbes. “Rather, a recession is ‘a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.’ With projections and economic data now showing a downturn, the US economy is about to enter a ‘Greater Recession’ than what was experienced during 2008 and 2009.”
If the upcoming struggles are substantial enough to eclipse the Great Recession, your small business needs to begin implementing plans now. Just as there are no atheists in a foxhole, there are no planless entrepreneurs during a financial crisis. But reactionary plans that are frantically whipped up in the moment are often worthless—applying strategy in advance gives you the runway needed to launch once things get difficult.
The Power of Your Base
Let’s turn the clock back to 2008 to see what strategies helped small businesses succeed even in the face of the Great Recession. Research from the Harvard Business Review reveals that one of the keys to not only surviving but thriving during this time was to focus on high-value customers.
Your business’s relationship with its customer base is akin to a statue being crafted by a sculptor. If the base is sturdy, the statue can be chiseled with impunity. And, once completed, statues with strong bases can withstand fierce winds, vandals, and almost anything else that might come their way.
You’re probably familiar with the concept that it takes substantially more money and time to attract new customers than it does to retain your current ones. So plan now to work efficiently during a recession by nurturing your base. They already believe in your brand and are willing to make purchases—even when they’re facing financial challenges of their own.
Staying more connected with your customers requires you to reach out to them through email and every relevant social media channel. Let them know how much you appreciate them by backing up your words with benefits (like a free resource they would find interesting) and value (such as an exclusive discount on their next purchase).
The Power of Being Proactive
The Harvard Business Review’s study revealed that the businesses that gained market share during the last recession all took action before the economy began to tank. It’s important to note that the small businesses that didn’t take prior action weren’t being lazy or unintelligent—they were simply mired in the myriad other obligations of being an entrepreneur. With a hundred tasks on your plate each day, it’s hard to make time for disaster prep.
Even if we don’t know the timeline of future recessions, we can take action now to prepare effectively.
“Main Street has it right: Even as the debate about ‘when’ continues among economic forecasters, companies should begin to prepare themselves for the next recession,” advises the Harvard Business Review. “As our research suggests, getting ahead relative to peers (even slightly) during recession gives companies an advantage that is tough to reverse when the economy is doing better.”
By streamlining their operating costs and focusing on their customer bases, these successful businesses outperformed the competition in their industries and emerged as stronger operations in 2010.
Proven Tactics for Your Plan
If you want to lower your costs and build your base, you’ll need to change some of your business’s current operations. After all, your status quo is predicated on normalcy. And you’ll need to be disruptive enough to grow during the “Greater Recession.”
Start by automating every task possible. There are hundreds of apps and software solutions that can remove obligations from your plate and complete them even better than you could. You’ll then be freed up to focus on the critical areas of your business and develop brilliant ideas for bonding with your customer base.
By stepping out of the daily grind to survey your business’s long game, you’ll be able to put sustainable plans in place. These strategies won’t come easy. But they’re often the difference between hanging a “Sorry, we’ve closed” sign on your door and celebrating a strong year during difficult times.