5 Ways to Prepare Your Business for the Next Recession

As the world emerges from the pandemic, the future state of the economy seems more uncertain than ever.

A combination of global events is driving rising inflation and causing supply shocks, leaving many experts to warn of recession and, in a worst-case scenario, stagflation. Main Street is already feeling the pinch – business owners like Michelle Pusateria, founder of San Francisco-based Nana Joes Granola, told CNBC in a recent interview that she feels the current economic situation isn’t getting better and that it is, in fact, “getting worse”.

Unfortunately, recessions and economic downturns are bound to happen; however, you can still survive and thrive when they do. If the past two years have taught us anything, it’s that you need to be prepared for the unexpected.

Here are five long-term strategies you can leverage to prepare your business for the next recession:

Strategy 1 | Focus on Your Target Market

Even in the best economic circumstances, ensuring you know how to connect with your target market is the first thing you should do when implementing any strategy. In tough economic conditions, your resources are more precious than ever, so ensuring you direct them to the right audience can be make-or-break for your business.

The best way to define and focus on your target market is to first analyze your existing customers, paying close attention to their needs and how, when, where, and why they buy.

Also, be sure to take a look at your product or service and ask these questions:

• What type of person/company can my product or service deliver value to?
• What types of people have the problems my product or service can solve?

Once your target market is well defined, you’ll be in a position to decide how you can better position your business to meet their needs and efficiently allocate your marketing budget and resources.

One company that was able to bring itself back from financial hardship through the power of defining and focusing on its target market is the Danish toy manufacturer, LEGO. In his book, “Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry,” David Robertson highlights how after facing bankruptcy in 2003, LEGO was able to identify the need to revolutionize their products to suit the needs of their two key target markets – children (the product users) and parents (their product purchasers). As Robertson himself put it, “Parents buy bricks, but kids buy stories.”

If you develop a strong niche and address the needs of your target audience, you’ll be sure to maintain a strong base of customers who’ll help see you through and grow in uncertain economic times.

Strategy 2 | Stand Out from the Crowd

Taking the time to understand what it is that differentiates your products and your business from your competitors can be what defines your ability to deliver to your customers, and ultimately survive and thrive in times of economic hardship.

LUSH, a well-known British cosmetics retailer, is perhaps one of the best case studies for perfecting the art of product differentiation. Their focus on simplicity and ethical buying has helped them differentiate their products from ‘luxurious’ and ‘out-of-reach’ competitors, giving them a strong foothold in 20 countries across the globe.

As a retailer, LUSH was hit hard by the pandemic lockdowns; however, thanks to their strong product differentiation, the company is now seeing a “better return on their bottom line” and plans to strengthen sales in all categories.

Strategy 3 | Build an Agile Team

Simply put, if you develop a strong, aligned team, you are more likely to keep your organization united and focused in uncertain times. A key part of this is bringing in leaders who have different perspectives, who are passionate about your mission as a company, and who are comfortable leading change. This includes being transparent about the strategic direction of the company, giving others a voice in decisions, and being available for your team to listen and act on feedback.

Strategy 4 | Be Intentional About Culture

A strong culture that is representative of your band will help your company maintain its motivation in times of economic uncertainty. One key part of this is making sure everyone who is working in the company—regardless of their position—understands, accepts and helps to perpetuate the company culture.

Zappos, a Las Vegas-based online retailer, provides a great example of the power of a strong company culture in times of hardship. Tony Hsieh, the company’s late CEO and Founder, placed enormous emphasis on shaping his company’s culture, instilling ten core values in every team member and weighting half the hiring process on a ‘cultural fit’ interview.

As Zappos dealt with the tragic loss of its founder and the fallout from the pandemic, its then CEO, Kedar Deshpande, highlighted the vital role of a company’s culture in determining its future success, telling The New York Times, “Culture is not just one or two people.”

Strategy 5 | Get Outside-In Perspective

In good times and bad times, having a mindset of using outside advisers and consultants is important to maintain; however, in difficult times, the right guidance is invaluable. Seeking out experienced experts can help choose the right course of action, helping your business grow in uncertain times.

In a recent article for Forbes, the Young Entrepreneur Council (YEC) highlights that when you’re starting a business, you can easily become overwhelmed by wide-ranging priorities and new learning curves. For that reason, taking the time to listen to experts who have been through similar processes and overcome similar challenges can have an enormous impact as you navigate difficult economic times.

Thriving in a Downturn

At SUMMi7, we worked with Indu Sanka, the owner of FSGS: Your Trusted Sign Partner, a commercial property signage company that provides comprehensive signage services to the multi-family housing industry, commercial real estate companies, and marketing agencies.

When Indu acquired the business in 2017, she realized she was facing a number of challenges:

• There were no formal processes in place, meaning some team members had difficulty embracing change and adapting to a more structured work environment.
• Employee roles and responsibilities were unclear, leading to high employee turnover.
• There was no focus on the customer, forcing her to dedicate her time to engaging with customers to address their concerns and commitments that had not been fulfilled.

As such, Indu realized that she needed to change the company culture in order to enhance their customers’ experience.

In 2020, at the height of the pandemic and economic uncertainty, Indu participated in the SUMMi7 Business Scaling Method™ Cohort program to help develop the company’s growth plan—starting with the vision that Indu had for her business and then engaging the team to support that plan.

As part of the process, we were able to clarify the company’s target customers, the value proposition that would drive customers to choose FSGS for their signs, and create a value stream map to help create standardized processes with a repeatable, high-quality product.

“I love the idea of coming up with the structure around team building and leading an organization. You basically have turned it from an art into a science. I see this as a learning opportunity just getting exposure to what you can build on. Even if you go into the individual pieces of it—the idea of creating a master schedule and having regular meetings and all of that. I like that there is a clearcut framework and a methodology to approach each of these tasks.”

– Indu Sanka

With an engaged team and a stable foundation in place, Indu continues to lead transparently, involving her team along the way to help innovate and grow the business.

To strengthen her company’s culture, Indu meets one-on-one with her team members every month, hosts a quarterly off-site get-together for everyone to stay aligned on the vision and current priorities, and holds a bi-weekly best practices forum to facilitate teamwork and give everyone a voice.

Despite the tough economic conditions, FSGS has outgrown its former space, and the company has recently moved into a new facility with more than twice the space to support their growth.

The Bottom Line

Regardless of what the future holds, shifts in macroeconomic forces – be they good or bad – will always be something for which businesses need to be prepared. As a business leader, you never know what’s around the corner, but if you keep these growth breakthroughs as a guiding ‘North Star’, you can shore up your business for whatever comes your way and be positioned for continual company growth.

Don't Miss Out...

Prepare your company for barriers and challenges that can prevent your business from growth in the SUMMi7 signature Business Scaling Method™ Cohort program with CEO and former Fortune 50 Executive, as well as award-winning author, Eric Strafel.

• Does your business have 10 or more employees with more than $2 million in annual revenue?
• Has your business reached a plateau?
• Are you experiencing challenges with team development?

If this sounds like you and your company, the Business Scaling Method™ Cohort program is the program for you!

For more information or to reserve your spot in our next cohort, contact Shelli Howlett at [email protected].