Suhaib Zaheer is SVP and general manager of Bluehost and is a small-business owner.
Some thrive in chaos, especially those who find inspiration and energy in times of pressure. When it comes to recessions, some companies miraculously grow despite the financial downturn around them. While fortune favors the brave, there are strategic steps you can take to help your organization during what is quickly becoming the Coronavirus recession or the “2020 Recession.”
While recessions affect the overall economy, they have led to the birth of great companies. During the economic downturn in 2008, we saw new businesses, such as Credit Karma, WhatsApp, Venmo and Google Ventures, catapult out of the crisis. This isn’t a new phenomenon, however. In previous recessions we saw other household names get their start, including GM (1908), Burger King (1950s), and Groupon, Airbnb and Square (2008).
With another recession looming, small businesses must shift their strategies to not only survive but find ways to come out stronger. Fortunately, today’s SMBs have history on their side and can mirror best practices exercised during previous economic downturns to plan, innovate and prosper.
Experts recommend various approaches — downsizing, increasing cash flow, acquisitions and mergers — but these tactics are not always feasible. The most universally effective strategies are those applicable to all businesses, regardless of size or industry.
Adapting To Customers’ Changing Wants And Needs
Each economic crisis presents a unique set of opportunities and challenges; some companies may already have the ability to address those challenges and will see an explosion of growth. As the world continues to change so will our needs: How will we celebrate important milestones typically done in-person? How can businesses remain productive? How can products and services change to meet the parameters of the virtual world?
Small businesses need to adapt and change philosophies along with the overall global climate — if you weren’t flexible before, you have to be now. The challenges brought on by the pandemic have created more opportunities for SMBs to scale and expand services. Existing companies should be thinking about advancements, capabilities and new use cases that address needs, as those that do will stand the true test of time.
One of our customers, Art Ortiz, owner of DogFit Dallas, recognized the new digital world as an opportunity to bring his pet training services to customers outside his region. The coronavirus pandemic eliminated his one-on-one and in-home dog training, so he pivoted, offering his services via videoconferencing, helping him expand outside of Dallas.
Always Prepare For Every Scenario
Long before Covid-19, experts warned that a pandemic would be catastrophic to public health and global economies. Despite these warnings, no one was truly prepared, as the reality of such an event felt implausible before now. This pandemic should be a warning to all small businesses: Prepare for everything, even if it seems unlikely. Adaptability and resilience are key to not only staying afloat but prospering after.
With a second wave of the pandemic predicted, SMB owners should take the time to sit down and make notes of things they did well, and what efforts were not effective at the onset of the pandemic — staffing, allocate spending, etc. — then leverage lessons learned for future planning.
Another client, Amber Knowles, a wedding photographer and owner of The Amber Studio, pivoted her strategy when the shutdown began. She quickly adapted, expanding her services to include product photography, while in turn changing her business strategy to include new offerings, such as stock photography. Now that she’s diversified her offerings, she’s more prepared for the future and is even exploring more revenue streams.
Focus On Keeping Existing Customers
Loyal customers sustain small businesses, and the conversion of new customers to supporters is what propels SMB growth. Bringing in new customers during economic turmoil can be difficult; prospects don’t usually go out of their way to seek out or purchase new products or services.
However, loyal customers will likely continue to work with, or buy from, brands they know and trust, particularly when times are tough. In fact, a recent Groupon survey found that 86% of American consumers said they supported small businesses during the shutdown, and 75% plan to support small businesses once stores reopen.
To ensure current customers are happy, focus on enhancing or personalizing the customer experience, thus keeping loyal customers and turning new customers into loyal supporters. To retain current customers, it is vital to engage with them and personalize their experience across channels so they feel valued. If your SMB is a retailer, take the time to customize communication with your customers based on their buying history. When customers feel valued, small businesses can feel confident that their revenue stream will be consistent in the short and long term.
Amy’s Ice Creams, another customer of ours, is a local ice cream chain in Austin, TX that switched its operations to curbside and delivery. They faced the challenge of re-creating in-store experiences in a safe and meaningful way. To overcome this, each ice cream delivery or curbside order came with delivery notes that had a personal message written to the customer from the employee who made their ice cream. This personal touch added a human element that customers couldn’t get from buying a pint in the grocery store.
As the economy and markets continue to change, so too will small businesses’ strategies. Nobody is immune to the effects of a recession, but steps can be taken to limit the impact and take advantage of the opportunities it presents. My recommendation to all small-business owners is to be agile and flexible, focus on customer retention and prepare for what life may throw at you.
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