Can a recession be good for your small business?
If you’re a small business owner, you’ve probably been hearing and reading news about a possible recession in the U.S. economy. Every day seems to bring new speculation, and the headlines grow more and more sensational.
So, you should be worried, right? Well, not exactly.
We haven’t officially entered into a recession, at least not at the time of this writing. And there’s no guarantee we will. But if we do, there are fantastic opportunities to build company culture and a leaner, more resilient business.
Let’s take a look at some of those opportunities now.
Recessions can help you build a strong company culture
It’s no secret that finding good help has been difficult since the COVID-19 pandemic started. Workers laid off at the beginning of the outbreak, especially those nearing retirement, simply never returned to the workforce.
Some workers said poor company culture was part of the reason for staying away. They often cited layoffs as an indicator that their employers don’t care. Others said they were simply taking time to seek more meaningful employment.
There are two big lessons learned here. First, keep your employees engaged in meaningful work. Offer them opportunities (and incentives if you can afford them) to give their ideas on ways to keep the business competitive during tough times.
Most of all, acknowledge those ideas and give credit to those that help the company. The next lesson is to be loyal if you want to build loyalty. Avoid layoffs at all costs. Explain to employees that you may have to cut hours as a last resort but won’t cut benefits.
And if you do provide fewer hours, encourage workers to try that side hustle they’ve been thinking about. You can even network with other benefits that may be looking for part-time help. The upshot is that if you take care of your employees during the tough times, the good ones will take care of you.
Recessions can help you generate loyalty in your existing customer base
All the effort you take to care for employees is going to trickle down to your customers. Even during tough economic times, customers will be hesitant to walk away from good service, even if they can get a similar product for a little less.
But the help can extend well beyond employees and good service. For example, use social media and email to let customers know you understand their struggles. Also, provide inexpensive content that helps them better use your product or service. If your content is adding value, customers will remember that and gravitate toward you first when they need something.
Recessions can help you save on advertising
Recessions are not the time to pull back on advertising. In fact, it may be an excellent time for you to double down. Have you ever heard of Moxie soda? Most haven’t, but in 1929 it was the best-selling soft drink in the U.S., well ahead of Coca-Cola. But when the Great Depression hit, Moxie pulled back on advertising, preferring to rest on its reputation.
Coke doubled its ad spend, and the rest is history. So what did Coke see that Moxie didn’t? First, they saw that advertising tends to get less expensive in recessions. In today’s world, digital marketing agencies and social media platforms have to compete for fewer dollars, so they are willing to lower prices or keep them the same.
That means gaining new customers gets cheaper. Good deal! Beyond company culture and potential ad saving, recessions also give you other opportunities. They present an excellent chance to cut fat from your expense sheet and find ways to become more efficient. And they also might lead to lower expenses for your business as vendors compete for fewer and fewer dollars.
So, while it would be best to avoid a recession, having one may make your business stronger. Just take the time to recognize opportunities and act on them. Who knows? You may even look back on these days with some fondness.