Starting a legitimate business is not easy. Keeping one going is even harder. And if you want a real challenge, try scaling up a business while maintaining profits – in the middle of an economic downturn.
At first glance, targeting growth in a recession might seem like a poor decision. Wouldn’t it be better to just “hang on”? It does depend partly on how well you’ve managed your business in the lead-up. If cash is tight and you have substantial debt, incurring more might be a questionable move. On the other hand, if you’ve built a solid financial base, then a down economy could represent a golden opportunity for expansion.
Consulting firm McKinsey & Company published a paper demonstrating this after conducting a global study of large corporations. Counterintuitively, the study found that successful companies didn’t focus on expansion during peak economic periods, choosing instead to pay debts and shore up their financial situations. Then, when recession hit, they went into growth-mode, taking advantage of the hard times that less-prepared competitors were facing – for example, targeting mergers and acquisitions at rock-bottom prices.
So yes, it’s entirely possible to emerge from a recession with a leg up on the competition. It doesn’t have to be through acquiring assets, though – it can also be through simply increasing sales volume. How do you do this? It’s not complicated, but it does require a genuine belief in the value of your own product. If you have that, then it’s just a matter of the following:
Three Paths to Growth
1. Increase promotional activity
In a recession, budgets typically shrink and purse strings tend to tighten. That’s the opposite of what you want, though, which is why managing your company’s finances well in the good times is so important. When competitors are dialing back their ad spend and customer outreach efforts because of a down economy, your most strategic move is to be doing the reverse. Marketing and advertising don’t somehow become less important just because discretionary spending is down. In fact, they become more important for a number of reasons.
First, there’s no better time to show that your business or brand is resilient. The more service-oriented the business, the more important this is. As an injury specialist, I’ll give an example from the field of medicine: Every day, millions of people are looking for a new medical provider of some kind. What they don’t want is to invest their limited time and money into a practice that will be shuttered one or two months down the road. Whether it’s attracting a new client or reassuring legacy clients that you’re just as reliable as ever, there are clear benefits to showcasing strength during a recession.
Second, your peers, on average, are doing less advertising during the down periods, so the market is more open than usual, which can mean a higher return on your outreach investments. It’s a perfect time to invite new customers into the fold using promotions like introductory discounts.
2. Target Internal Customers
Arguably, employees are your most important internal customers, and possibly your most important customers, period. I think of employees as the most valuable patients that my business serves, even though the service they are getting differs from what we provide to our external customers.
Are they being treated in a way I would like to be treated? Are their needs being met? Do they buy into the overarching mission of our business? These are questions I try to ask about my staff every day. If the answer to any of them is “no,” then there’s a serious barrier to growth. A company whose employees are burned out, or simply “maxed out,” is not a company that will be moving forward with any semblance of speed or agility.
Take care of your people. They will take care of your customers, and your customers will take care of the business.
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3. Struggle With Who, Not How
It’s possible to create incredibly different outcomes by rearranging these three letters. How is, of course, a big deal. But if you’re trying to solve a unique or difficult problem, bearing the weight of it yourself is not the way to go. Instead, ask who has faced a task like this before and beaten it? Who within your organization might be capable of taking on new or bigger responsibilities? Who outside of your organization might provide useful mentoring or advice?
The essence, here, is that achieving growth is never going to be the result of one person’s effort. That’s something every entrepreneur and leader already knows, but it’s also easy to forget, so if you catch yourself spending time on a how question, turn it into a who question for a shift in perspective.
Bonus Tip: Check Your Diet
I’m not talking about what you eat, although that’s important too. I’m talking about the information you’re digesting. Running a business is a challenging endeavor for the mentally-fittest, most optimistic of people – which means it can be a nightmare for someone who isn’t careful what they feed their mind.
This isn’t new-age fluff. What you read, watch, and engage with is proven to affect your attitude and health. Since growing a business in a recession is a significant challenge on its own, the most fundamental (if not the easiest) step you can take toward success is caring about and directing where your personal energy is going. You are the cornerstone of the foundation. Make it rock solid, and go from there.
As it turns out, it’s not only not impossible to grow during a recession, it might actually be one of the best times to do so. It takes some effort, of course, but that’s nothing new for a serious entrepreneur. Ensure you believe in your product and service, keep these three paths to growth top of mind, and stay focused on the positive – then watch your company blossom before your eyes, regardless of current economic state.