7 Strategies to Survive the Recession

What’s Ahead in 2023?

It’s the question on everyone’s mind: What does this year have in store for us? According to Bloomberg research, North America will likely experience a mild recession starting sometime in the second half of 2023. And we’re already seeing the canaries in the coal mine: inflation, rising interest rates, massive layoffs at big companies.

Bloomberg estimates a 70% probability that the United States will enter a recession this year - up from 65% in November and 30% in June of 2022. Stocks were down around 20% in 2022, and experts predict they’ll continue falling in 2023.

Despite all economic forecasts pointing at the inevitability of a recession, this is no time for despair. According to marketing strategist Chala Dincoy, there’s still plenty of good news. She says that 90% of small businesses remain confident they’ll be around a year from now.

Meanwhile, although giant companies are laying people off, smaller ones are still struggling to find workers. “Staffing continues to be the biggest problem,” she says. Chala is in the unique position of working on both sides of the U.S.-Canada border and straddling the worlds of small and big enterprises. She recently joined business expert Robert Pierce in a Quadient webinar to share seven strategies companies can use to make the most of this moment and prepare for the storms on the horizon.

Strategy 1:
Improve Cash Flow and Reserves

You don’t have to be a finance expert to know that the easiest way to weather a recession is to have lots of cash on hand. While that sounds great, it can often be tricky to improve cash reserves in an economic downturn. But that doesn’t mean it’s impossible.

Roger recommends starting by updating your cash-flow forecast for the next 12 months to see where and when your company may need more capital. He says you should try to be conservative with those estimates, as customers will probably be buying less during a recession.

With the updated 12-month cash-flow forecast as a roadmap, businesses looking to arm themselves with cash heading into the recession can find funds by considering the following questions:

• Can we get rid of excess inventory?
• Can we liquidate some soft assets we don’t need?
• Can we reinvest some of our own capital, like personal savings?
• Can we refinance against existing assets, like property?
• Can we sell non-essential parts of the business?
• Can we find external investors?
• Can we set up extra credit facilities if we need more funds?

Roger advises that this is not the time to be making huge purchases, if possible. It is the time, however, to be securing additional financing — after all, “access to sources of extra cash can’t hurt.” One way is to apply to your bank to expand your additional line of credit, which will come in handy in an emergency cash-flow situation.

If you can’t avoid big purchases, he suggests exploring affordable financing options, rather than draining cash reserves. For instance, the governments of the United States and Canada spend billions of dollars assisting small businesses with their expansion and marketing plans. Roger admits that it can often seem like a labyrinth, but if you “dig deep enough there’s money for anything you really want to do with your business.”

Strategy 2:
Increase Sales

This might seem obvious, but boosting sales heading into a recession is easier said
than done. However, there are some proven strategies that can help — even in the
worst of times.

Stop marketing and start selling

“Cash is oxygen,” Chala says, and her best survival advice for businesses is to “stop marketing and start selling.” In this economy, she says, passive marketing through tools like social media is just not going to cut it. To create cash fast, you have to be where the sales are happening, which means outreach and meetings.

Then, it’s about listening to what customers need and finding a way to sell that to them. If there are existing products that customers aren’t buying or don’t even know about, launch a program to reintroduce them. Use upselling and cross-selling initiatives to boost sales of those products.

Chala also recommends getting creative with time-limited offers like Christmas in July or Mid-Year Black Friday. You can even offer incentives for cash purchases or create cross-selling packages with referral partners. Be bold and resourceful, and pull out all the stops.

Get a website that converts

Chala sees many small businesses plagued by what she calls “website shame.” They constantly claim to be redesigning or relaunching, but somehow always end up stuck with a site that doesn’t convert. “This is not the time to be in that situation,” she says.

And that’s especially true now because post-COVID there has been a huge jump in corporate purchasing online — both in applications and through websites. Having an outdated or lackluster site amounts to leaving plenty of money on the table.

“You’re doing all this great work: getting people to your website, your sales efforts, your social media, your promotions. If the website doesn’t convert prospects into leads or doesn’t capture email addresses — or whatever you want it to do — that’s a big fail, right?” — Chala Dincoy, Founder and CEO of The Repositioning Expert

Chala explains that even if you don’t have an app, you should still make sure there are website funnels designed into the buyer’s journey. No matter how small you are, you can still improve the user interface and experience to ensure your site converts.

Re-niche to survive

One of the most successful sales strategies Chala teaches her clients is what she calls “re-niching.” In her opinion, too many small businesses take the “shotgun approach” in their attempts to sell everything to everyone. Re-niching is about switching to a “cannon approach” — picking one industry or interest group and targeting them with the marketing equivalent of a cannonball.

The process starts by looking at all the different interest groups and talking to their decision-makers, to determine what problems you can solve for them. You then “reposition everything you’re saying and doing — in your marketing online, on your website and in your elevator pitch — to speak to that pain.”

Often this comes down to having a marketable differentiator that sets your brand apart from the rest. Once you identify your cannon target, you can get out in front of them and create the differentiator that makes you indispensable.

Case Study: The Food Distribution Guy

Chala helped re-niche a marketing generalist as a food-sector specialist. 

Before: GR Marketing Strategist

• Shotgun approach: Trying to be everything to everyone.
• Tagline: “The heart of your business success lies in its marketing and distribution.”

After: The Food Distribution Guy

• Cannon approach: Helping food manufacturers get their products on supermarket shelves.
• Tagline: “Your one-stop resource to the Canadian grocery sector.”
• Six or seven multi-five-figure contracts within six months.

MORAL OF THE STORY: RE-NICHING WORKS!

Strategy 3:
Preserve Your Margins

With a recession on the horizon, there’s no better time to take a hard look at your margins. Roger points out that margins can erode quickly, warning that “things can creep up on us if we’re not on top of it.” Like with cash reserves, analysis and benchmarking are a good way to detect areas of concern or opportunity.

Be on the lookout for:

• Increased supply and labor costs: Watch for areas where raw material costs have increased.
• Excess discounting by employees: Beware of giving away too much during the sales process.
• Production wastage: Look for inefficiencies across the system.
• Opportunities for streamlining: Manual business and administration processes may be overly complicated and require expensive labor.

The best way to improve margins, Roger believes, is by investing in efficient business solutions and software to monitor and systemise costs. If you’ve got the warehouse space, he also recommends buying inventory in bulk or at a discount before prices get even higher. Cutting overhead and labor expenses are two additional ways to tighten the belt.

Personalise your loyalty programs 

Chala is a huge fan of loyalty programs as a means of driving recurring revenue. She says it’s all about understanding the customer and what problems you can solve for them.

“Any loyalty program that we design is an active listening program. That’s meeting with them regularly and focusing on why they love you and what they still need — and then customizing the reward to them. To me, that is a superior way to handle customer loyalty.” — Chala Dincoy, Founder and CEO of The Repositioning Expert

For small B2B businesses wanting to engage with their customer base in this way, Chala recommends social media as a great place to start.

Dare to raise prices

Chala’s other biggest piece of advice — which might actually seem counterintuitive — is to raise prices. This is the perfect time to do so because the cost of everything is going up, so you’ll receive less pushback than in other moments. “In this economy, there’s no question about it because it’s everywhere,” she says.

Plus, if you have a strong brand, the majority of your customers aren’t buying for the price, but for the market differentiator you offer that they can’t get anywhere else. If your customers are lost without you, Chala says, raising prices will be a non-issue.

She has found that this often comes down to a mindset shift. The trick is to adopt what Chala calls a “wealth mindset.” Under this paradigm, cheap prices mean that something must be wrong with the product or service. Whereas higher prices indicate excellent quality or exclusivity.

When Chala’s customers wonder if they’ll be pricing themselves out of their market, she assures them they won’t. Plus, she notes, wouldn’t everyone be happier if they could work less by having fewer clients paying higher prices? For that reason, she recommends raising prices to “the barrier of what you can push your brain to.”

In terms of how to break the news, Chala has different strategies for different customers. With new customers, you don’t even have to tell them, they’ll just accept it. Veteran customers, on the other hand, might require more explanation. Chala recommends honesty and possibly delaying the increase as a reward for their ongoing loyalty. As for the rest, don’t overthink it: “You just tell them why and that’s it.

Strategy 4:
Retain Your Employees

Staffing remains one of the biggest challenges facing businesses today, and the easiest way to avoid having to fill loads of vacancies is to not lose your workers in the first place. “Having great employees in place is crucial to your business success,” Roger says, adding that “when staffing levels drop or employees don’t show up, it threatens your ability to serve customers, generate revenue and get through the recession.”

In Chala’s opinion, keeping employees is all about maintaining a positive workplace culture. She cites MIT research showing that toxic environments are 10 times more likely to generate high turnover rates than compensation. “People no longer care about the money as much as they care about the environment,” she says.

Plus, the problem goes beyond turnover. Nowadays you often hear of “quiet quitting,” “absenteeism,” and “resenteeism,” where workers continue to collect a paycheck but are unhappy and effectively stop doing their jobs. To counter this, it’s essential to root out any unethical or abusive management practices and make sure employees feel supported and have the resources they need in a flexible and collaborative environment.

Chala notes that even smaller companies currently have huge mandates around issues like diversity, equity and inclusion (DEI) and environmental, social and corporate governance (ESG). “All the social stuff has come to the top,” she says.

Case Study: Lee Building Maintenance

Chala’s client has 400 times the average retention level in its industry, which is notorious for constant churn.

How? Owner Jason Lee has built a corporate culture around the fact that 90% of his workers are Latino. For example, he provides paid family leave and prints company materials and signage in Spanish.

“He has taken everything they need and made it into programs,” Chala says. And that translates into record-breaking retention.

Strategy 5:
Prepare for Supply-Chain Issues

Though most of the side effects of the pandemic have receded into memory, supply- chain issues remain a persistent problem. In the context of an economic downturn and likely recession, ensuring a steady flow of inventory, supplies and services is essential to survival.

Unfortunately, many of the factors driving these issues are beyond our control. But that doesn’t mean there’s nothing we can do about it. Roger suggests some proactive strategies like lining up alternate suppliers, stocking up whenever possible, and investigating options for buying local.

But despite your best efforts, you may still find yourself in a situation of supply shortage. What to do then? Chala says that this is when relationships with both customers and suppliers become more critical than ever.

“If you cared about relationships before, now you have to spend extra time, money, energy and resources to develop [them]. Because again and again, it’s been proven that that’s what saves the day.” — Chala Dincoy, Founder and CEO of The Repositioning Expert

In terms of customer relationships, Chala says that the number one problem in the marketplace right now is that people can’t get what they need — despite waiting for hours on hold. She points out that a side industry of backup specialists has started to emerge to fill the gaps where companies are falling short. If your customers are suffering as a result of your supply shortage, consider bringing in these specialists as a temporary solution until the situation normalises.

As for relationships with suppliers, Roger believes that treating them with respect and, most importantly, paying them on time, is a key part of the formula. Accounts payable software is a great way to keep everything on schedule and ensure suppliers have no reason to walk.

Strategy 6:
Lean on Advisors

Nobody becomes a successful entrepreneur without the help of mentors and advisors, and their input is more valuable than ever in uncertain times. “More heads are better than one,” Roger says, warning that it can be dangerous to make decisions in a bubble.

He recommends reaching out to your network of professional, legal, financial, and marketing contacts — as well as to other members of your industry — to get outside opinions. This is a time to support each other, not to engage in dog-eat-dog practices. Asking for and offering help will help us all stay afloat.

Chala has always been a big fan of professional coaching, specifically in “paying top dollar for the best.” It’s part of the wealth mindset she mentioned previously: If you want your customers to pay top dollar for you, you should go to the people whose clients pay top dollar for them. Find the best possible coach and pay whatever they charge; Chala promises that it’ll be money well spent.

Strategy 7:
Be Good to Yourself

The final strategy for weathering a recession is very personal, and it has to do with avoiding burnout. According to a Forbes article from 2022, 42% of small and medium business owners report experiencing burnout — with symptoms including mental and emotional exhaustion, sleep or digestion issues, increased sensitivity and outbursts and negative feelings of resentment, dread or ineffectiveness. 

Chala points out that business owners are already under such tremendous pressure, and subject to such high levels of rejection, that the added stress of an economic downturn can sometimes be too much to handle. With so much on our plates, Roger adds, we often forget to be good to ourselves.

Finding ways to reduce stress is ultimately a personal exercise. Roger finds that doing sports or playing with his children helps him unwind and gain perspective. Chala suggests working with professionals to change your mindset around expectations, delegation, time management or whatever else you may be struggling with. 

Investing in the coaching or rest you need to prevent burnout is a necessity, not a luxury. And that’s especially true given the additional stresses of our current economic climate. Being good to yourself is being good to your business.

Wrap-up: Stay Optimistic and Prepared

The economic forecasts may be bleak, but that doesn’t necessarily mean bad omens for your business. In fact, perhaps we could all use a dose of Chala’s positive outlook.

“Sales are still happening. People are still hiring. People are still buying. So for me, the sky’s the limit this year, and I don’t see any downside at all.” — Chala Dincoy, Founder and CEO of The Repositioning Expert

Apart from staying positive, be vigilant about your company’s preparedness. Question every move and decision. Examine everything from every angle and do the math. Talk to your advisors and business contacts. And, as Roger advises, “trust no one, but trust all of them.” In other words, no single person has all the answers — but taken together, a variety of opinions can prove insightful.

Most importantly, he says, don’t forget about your big long-term goals. “Keep your eye on where you want to be post-recession, so your business emerges where you want it to end up.” The recession will come and go, but taking smart actions now can make the difference between weathering the storm or going down with the ship.

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