5 Steps to Make Your Business Recession-Proof
The term “recession-proof” refers to industries or companies that are generally insulated from the negative effects of an economic downturn. Recessions often arise after the economy reaches a peak and then begins to constrict, resulting in two consecutive quarters of negative GDP growth.
For various reasons, some businesses and sectors do well during a recession. One way to identify recession-proof businesses is by looking for those which have negative beta values. This means that their asset’s price moves in the opposite direction of the market. The healthcare sector, for example, tends to have more negative beta values because, regardless of the economic situation, consumers will always need medical care.
You can never really predict the nature and course of a recession. However, what’s important to know is that there are ways to insulate your company when the economy goes south. Here are five steps you can take today to set your company on the right path.
1. Improve Your Business’s Portfolio
A good way to guard against a recession is by increasing the number of cash holdings in your business’s portfolio. Asset diversification, a long investment timeline, and rebalancing the business’s investments can also help to protect your business from a recession. They allow investors to access liquidity quickly to benefit from a crashing stock market.
2. Pay as You Go
Even with increased cash holdings, to recession-proof your business you also need to be able to tie all business expenses to matching sales. For example, if your business needs office supplies, you should aim to pay those expenses from the sales generated within that same period. Try to avoid pulling out money from your reserve to fund your operations. If the sales you’re making aren’t generating enough money, then you need to focus on better ways to reach and grow your target market, which brings us to the next step.
3. Invest in Marketing
It might not be the first thing you think of when you’re trying to save money, but promoting your business is crucial to overcoming a recession. Investing in strategic promotions helps you acquire new customers which can help to offset lost business.
Take a step back by looking at your current marketing strategy and reevaluating your marketing process in the current environment. Reexamine your company’s website and keep a close eye on analytics to make sure that your site is still generating revenue for your business. Sometimes even minor tweaks to your website and social media strategy can lead to big returns.
After you’ve determined where to invest your marketing dollars, it’s important to refine the voice of your business and create a better value proposition for your customers. This will help establish a relationship with potential consumers and build trust with existing ones.
4. Prioritize Customer Service
Considering all the business recession strategies, prioritizing customer service is considered the most effective way to guarantee long-term stability for a business. Customer service is essential to getting repeat sales, and repeat sales are essential for a business to survive during a recession.
Although this can depend on your industry, attracting new customers often costs more than keeping existing customers. Realizing this will help your business become recession-proof by channeling your focus on the wants and needs of your existing consumers. Listen to their concerns and make it a priority to resolve them. Increase consumer satisfaction by ensuring that your staff is fully trained on the products or services you’re offering and on customer care.
5. Lead by Example
Great leadership starts with leading by example. It helps employees see what’s in store for the future. One of the responsibilities of a great leader is to inspire employees to work hard and do the best they can for the business or organization. To do so, the leader must get involved in the process and show their employees the way out. Do you need to increase work hours and cut back on salaries? Start with yourself. Work longer hours and take a pay cut. Show your staff that you’re all in this together.
These Five Recession-Proof Strategies Are Just the Start
When it comes to business recession strategies, there are several different approaches to take. Depending on your business, some will work better than others, but the key is having current economic information and analysis at your fingertips. Stay connected with Monster and you’ll get free access to expert insights, from the latest in economic trends and news to recruiting advice and strategies.