The business world is changing faster than ever these days, and that means that recessionary periods can happen without much warning. As a founder, it’s important to have a plan for how you’re going to weather a recessionary storm. Here are a few tips to help you get started.
Tip #1: Find Expense Line Items You Can Cut / Outsource
The first thing you need to do when a recession hits is to take a close look at your expenses and see where you can cut back. This may mean making some tough decisions, but it’s important to remember that your goal is to keep your business afloat during this difficult time. Every little bit helps, so don’t be afraid to make some tough choices. In order to do this efficiently, you need to ensure your bookkeeping is in order, and the accounting software or accounting app you use is able to provide you with key business metrics to make the right calls. You can also look to outsource some back-office work if it is cheaper to do so, like outsourcing the accounting and finance functions of your business.
Tip #2: Prioritize Your Marketing Efforts
During a recession, it’s more important than ever to make sure that your marketing efforts are focused and effective. This means Prioritizing the channels that are most likely to generate leads and sales. For example, if you sell products or services online, then your focus should be on digital marketing channels like SEO, social media, and email marketing. However, if you have a brick-and-mortar store, then you’ll need to focus on more traditional channels like print advertisements, direct mail, and local PR. The key is to focus your limited resources on the channels that will generate the most ROI. You might also want to start looking at a couple of very important business metrics: CAC (Customer Acquisition Cost) and ARPU (Average Revenue per User) so you can focus on high ROI strategies. Some accounting tools and apps suitable for a small businesses help you track these metrics automatically.
Tip #3: Focus on Your Core Customers
During a recession, it’s also important to focus on your core customers—those who are most likely to continue doing business with you even in tough economic times. These are usually your best customers—the ones who have been with you for awhile and who have a history of spending their money with your company. If you can keep them happy and loyal during a recession, then they’ll be more likely to stick with you when times are good again.
While no one likes the thought of going through a recession, the reality is that it’s inevitable from time to time. As a founder, it’s important to have a plan for how you’re going to weather the storm, and the right (and cheap) business finance tools, accounting apps and software to help you make quicker, better business decisions. By following the tips above, you can help ensure that your business comes out of the recession in good shape—and maybe even stronger than before!