Rising inflation, market volatility, increased unemployment, and shrinking GDP contribute to growing global recession fears. Unprepared businesses are especially worried, and with good reason.
If you’re unsure of how to handle the customer, labour, and financial challenges of recessions, you aren’t alone.
Let’s explore what a recession means, how to spot one, and how you can prepare to weather the storm.
Is your business seeing the signs of a global recession?
A recession refers to a sustained period of economic downturn marked by declining stock prices, higher unemployment rates, and inflation. Needless to say, economic collapse can be devastating for businesses.
Cash flow is one of the first things to take a hit in a recession. So, ask yourself, what has your cash flow looked like over the past few months? When inflation rises, consumers spend less. Companies rarely have cash reserves to offset the decline in sales. Any cash coming in gets allocated to expenses, leaving little room for ‘rainy day’ savings. It’s worth noting that a significant decline in cash flow could be an indicator of a recession.
Furthermore, have you noticed a sizable uptick in unemployment? Have you had to lay off a lot of employees recently? One of a business’s biggest expenses is employee wages. Many companies cut back on labour to preserve cash flow, which raises the unemployment rate. Huge labour cutbacks could be an indicator of impending trouble.
Real estate is another area that suffers during an economic collapse. When consumers don’t have adequate income, homebuilding, home sales, and renovations stall. Another area to consider is the stock market. Sustained stock market losses are typical when a global recession is on the way. This is because investors foresee trouble and stop buying stocks as a part of their risk management strategy.
How to make sure your business is resilient
With the looming threat of recession, businesses will need to rethink their strategy to adapt and survive. Fortunately, there are a few things you can do to prepare. Following these tips can help you succeed in a volatile economic environment.
Harden your business through adversity
No business can avoid the impact of a recession, however adopting a forward-thinking mindset will help soften the blow. In a global recession, you’ll need to implement strategies that will preserve your customer base, keep the cash flowing, and outperform your competitors.
One thing that goes without saying is managing cash flow is the biggest concern in an economic collapse. The first thing to do is cut back on unnecessary spending. However, be selective about what you cut. Don’t cut so much that you can’t sustain operations effectively.
Next, stay on top of your finances and monitor your financial metrics. This will let you know where your business stands so you can react quickly when things arise. Stop any plans for hiring. Also, review your staffing requirements to maximize how you use each employee. Make sure employees are cross-trained in key areas of your business. That way, if you do need to make the difficult decision to downsize, you’ll still have employees equipped to keep things running smoothly.
Develop your brand and strategy during a global recession
Global recessions are a perfect time to innovate. An economic downturn forces businesses to get creative to survive. They may come up with innovative products or processes that continue benefitting them long after things look up. Even though you should cut costs amid recession rumours, you should also still strategically invest in your business. The key is to invest in the right areas to yield growth.
Many companies take advantage of lower costs during this time to buy new property or equipment. Though it may seem counterintuitive, the economy always cycles back to prosperity. Companies that invest in trying times expect to see their investments pay off down the road.
In the same breath, it’s important not to get overconfident and pursue the wrong investments. Companies that do so are often making financial decisions based on speculation rather than on objective, factual information. Making subjective decisions could spell disaster for a company during and after an economic collapse.
Lastly, don’t wait until it’s too late to act. Analysis paralysis is very real and will only wreak havoc on your business. That’s why staying on top of your finances and the market is paramount. As long as you make use of factual, real-time information, you can proactively make sound business decisions.
Field sales CRM technology like Skynamo helps you identify and maximize profitability by focusing on revenue-generating customers. Additionally, CRM tools can help you identify which marketing strategies work best to reach those customers.
Focus on your customers and maintain loyalty
A customer-focused company puts customers at the core of strategy and decision-making. Businesses that focus on the customer, rather than solely on the bottom line, stand to strengthen their customer relationships. This strategy helps you better understand what they really want. That way, you can fine-tune your product to meet those particular needs. Building these relationships is invaluable in fostering loyalty – before, during, and after an economic downturn.
The first step in building a customer-focused company is creating an environment that values the customer. It’s critical to treat every customer interaction as an opportunity to delight. Ask for their feedback, too, as this will show them you care about their thoughts.
Another strategy is to offer a rewards program that gives customers discounts or exclusive offers.
Lastly, engaging with your customer base is important. Use social media or share tips on your blog to keep your brand at the forefront of their mind. CRM software helps you stay in contact with your customers through automated marketing emails.
Skynamo: helping prepare your business for the next downturn
There are no two ways about it: a global recession affects every industry. The shrinking economy, high unemployment rates, and inflation create cash flow problems that many companies simply aren’t prepared for. However, focusing on strengthening your brand, making the right investments now, and adopting a customer-first mindset can help companies mitigate the effects of an economic downturn.
Let’s chat about how Skynamo helps you empower field sales reps to stay efficient regardless of what’s happening in the world.