Part I: Can You Grow Your Business in Tough Economic Times?
There is an old and wise Norse saying: when fishermen can’t go out to sea, they repair their nets. While the economy has slowed and with no great prospects for the immediate future, there is still much that individuals and businesses can do to grow. In fact, a study conducted by Inuit, the maker of Quickbooks, found that nine out of 10 small business owners believe there are opportunities for business growth in today’s economy. Growth is the number one issues on the minds of small business owners.
Larger companies know this too. Some of the most well-known company names have used economic recessions to ramp up their efforts and capture more of their markets. The results have lasted well into the up-turn of the economy. Revlon, for example, increased their marketing efforts in the 1970’s recession. Likewise, Nike increased their profits by nine times in the recession of the early 1990’s.
Does this mean that consumers suddenly find they have a need for make-up and sneakers in the midst of economic stagnancy? On the contrary, most people cut back on non-essential items during tough times. So, what were these companies doing that helped them increase profit? There are several answers to that question, and they apply to all sizes of businesses from corporations to small businesses.
- Increase your marketing. According to a 1998 PIMS study, companies that increased marketing during the last recession achieved an average return on capital employed of 4.3 percent compared to 0.6 percent for those who maintained marketing spending and – 0.8 percent for organization that cut.
The idea is to market more efficiently. Choose the goods and services that define the core of your business and direct your efforts to branding yourself for them. Putting more money behind a few things proves more effective than spreading your funds over many.
- Cultivate Customer Loyalty. Though it may seem like a crazy idea to give away freebees or offer an extra service, now is the time to do it. Studies show that on average a happy customer will do business with you for five years. Imagine how long they will stay with you if they are euphoric about your service. This is the time when you need to build relationships, show appreciation for consistent customers, and attract new ones. Offering small perks like discount cards and special deals, and making sure your staff is giving the best service possible will see you through and beyond the recession
- Use Creative Collaboration. Finding ways to pair up with other organizations can cut costs and broaden your clientele. Think about offers you can cross-market. For example, a restaurant and bar can promote each other through discount coupons. A local bank and financial service organization can promote each other’s services to their patrons.
- Take advantage of the growing labor pool. If hiring in a recession seems counter intuitive, think about the big picture. One clear advantage to increasing unemployment is a larger number of people looking for work. This is a good time to attract employees that have a lot of experience and a strong work ethic.
While it may seem trite, the best thing you can do during a recession is to maintain a positive attitude. The economy, as we all know, is cyclical. Waiting it out is not enough. The nets need preparing, so now is the time to make them stronger than ever.