Recession-proof your Business in 2023
Simple strategies to adopt today to survive the tumultuous months that lie ahead.
If you’re like most companies these days and staring down an uncertain future in the coming months, the options you have to survive may seem binary—either reduce your costs (even at the risk of reducing the quality of your product), or increase prices high enough to maintain the quality and consistency of your product (or service).
Judging by most businesses, it seems that many have chosen to go with the former (and in many ways the more obvious) strategy. Yet on closer inspection, it appears that the ones who managed the latter—increase their prices while maintaining (or even improving) the quality, are the ones that thrive.
The simple rationale for this is that as your prices go higher, you will always find a more affluent market with the means to afford your products, provided that the products themselves aren’t compromised. Whereas if you go lower towards value-driven markets with dubious product quality, you’ll soon find yourself competing in an ocean of generic garbage with too many sellers scrambling to get the best price for their junk (buyers be damned).
So if you must increase your prices in order to remain profitable; do so. But remain true to the quality of your products. Never forget what attracted customers to you in the first place and don’t expect them to stick around while you pull the wool over their eyes. And you don’t have to explain away your higher prices. Just let your products speak for itself.
Recession-proofing your business however is more than simply increasing prices to remain solvent or we’ll all be doing it. There are other strategies you need to consider in a market downturn. These include everything from prioritising expenses to managing employees and being hyper realistic about the future. For example,
Don’t blow money on Advertising. Instead, spend a little more on Customer Service.
At my company, we give free replacements for broken or damaged products regardless of when or how they broke. The cost of such replacements are part of the marketing budget, and I would argue is a far more effective use of our marketing budget than generic advertising. If you view society with a cynical angle and think such a generous policy might lead people to take advantage of it by returning and replacing stuff they bought years ago, you might be right. But this has not been our experience, and the upside to customer service and brand loyalty have been more than worth it.
Even if your own customers comprise mainly of people with questionable morals (perhaps a re-look at your business model might be in order if this is true), meeting their requests will still likely cost less than what your company spends each year on advertising. And remember that it will always cost more money to acquire new customers than it does to keep the ones you already have.
If you must Advertise; Present—don’t simply announce.
Most ads for products I see these days do a decent job of announcing their existence—not so much in telling me why I need it, or better yet why I shouldn’t be without it.
I remember watching a recent Christmas-themed ad by Blok and Dino (two highly underrated guys with misplaced acting chops) but the script fell far short of creating any real interest in the product itself (Spoiler: it was Cargills Ice Cream). Was the ad entertaining? Sure. My wife and I enjoy watching them whenever a new one drops because we appreciate the comedic nature of the production—just not whatever it is that’s being announced at the end.
Ads work when they cultivate habits in consumers—not when they shove products in their faces.
If Cargills had rather channelled their advertising budget towards developing a habit among consumers—say for having ice cream as an essential component of any family gathering or mealtime during the holidays without which the meal or gathering would not be complete, this would be money wisely-spent towards building a life-long connection to their products. Not merely for riding a momentary wave of attention on social media amidst the myriad other distractions faced by consumers.
Don’t say Sustainability. Be Sustainable.
If your core values are drastically different from those of your customers, success for your organisation, especially during a recession, will be an uphill battle. This is why you probably wouldn’t want someone who doesn’t believe (or care) about climate change running an electric car company.
If you cannot muster any real interest in sustainability apart from seeing it as trendy corporate lingo or marketable jargon, it’s better to relinquish control as chief decision-maker for your company’s future direction to someone who can. You might still be successful if you didn’t—but historically speaking, companies which chose to ignore the future were often doomed to be relics of the past.
Be obsessively Future-focused.
The success of AI tools like ChatGPT which reached 1 million users in just 5 days (Facebook in comparison took 2 years) shows not only the awesome capabilities of next-generation AI, but also the exponential pace of its adoption as Gen Z and Generation “Alpha” (children of Gen Z born after the mid-2010s and the first generation to be fully immersed in technology and digital communication from birth) comes of age.
While companies in the 70s, 80s, 90s and even 2000s had months and years to adapt to new technologies coming on the heels of the IT revolution, companies today have weeks or mere days in which to adapt, or risk being left behind.
Handle your Employees with care.
Managing people in organisations are by and large the most sticky issue for business managers and CEOs around the world. Steps taken to handle matters of human capital are often rife with contradictions and unintended consequences—more so during a recession when HR comes under much greater scrutiny.
While there are no easy answers here, a tried and tested strategy is to always lead with empathy. Layoffs maybe essential for survival, but keep in mind that the people who leave can either be proponents or lifetime adversaries of your organisation—and which of these they become depends entirely on your level of empathy for their situation.
Empathy must also extend to those who remain and are expected to carry the extra weight, double-hat, multitask etc. It helps to see them not as generic cogs in a proverbial production line, but rather as individuals with the same desires, needs and wants as yourself. Only then will everyone move in lockstep towards the light at the end of the tunnel—pulling your organisation along with them.
Charity is an Investment (and often a better Investment than any investment)
I never met a poor philanthropist. There are miserly millionaires of course but they are too few and far between in comparison, and more often than not their fortunes barely last a single generation. I believe strongly that the positive energy you put out into the world begets more positive energy. And while Newton may not have realised at the time, the inverse reaction to your generosity may not only be accelerated but also exponentially larger.
This is why your corporate donations and charitable contributions will often trump investments during a recession—with returns they generate being several times larger than your total investments.
A S
