Recession Strategies for Small and Home Businesses

February 15, 2009 | By | Reply More

Times are tough and the economy is in a recession . However, the recession does not mean that opportunities have ceased to exist and that we will never come out of it. After all, people still buy things — maybe not in the freewheeling kind of spending we’ve seen before, but they are still spending. Businesses still operate and continue to produce their products and deliver services. The economy may have slowed down to a trickle, but it has not stopped.

We’ve compiled a list of tips and lessons from experts and authors on what small businesses can do to survive these tough economic times :

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On Developing Winning Strategies

  • Be a leader
  • Identify and strengthen your business shortcomings
  • Get everyone on board
  • Salespeople have to sell
  • Protect your margins
  • Focus on the core business
  • Don’t wait too long to cut costs
  • Don’t let anyone treat you like a bank
  • Know which marketing tactics are most effective for your market
  • If you do have to lay people off – again, be a leader

– Monroe Porter, “Winning Strategies in a Challenging Economy”, Leaders in Landscape 2009, pp. 8-9

  • Stay curious: A recession is no time to shut down your own thinking. In fact, it is time to open it up.
  • Invite your savviest outsiders inside: At a minimum, you will build empathy and loyalty with your customers and other key stakeholders (major investors, community leaders and the like).
  • No “one” knows enough: engage the organization: need to engage others within the organization in developing your strategy.
  • Create Strategic Traction Within the Organization. Strategic leadership also requires embedding strategic capability throughout the organization.

– Kate Sweetman, “Leadership Code: In Recession, Strategy Even More Important”, Fast Company, November 14, 2008

On Selling to Clients

Ask questions. Find out how they are changing their business model in the face of a recession. Are they eliminating products, adding a lower cost product line, extending credit lines, offering different buying terms like month-to-month or pay-as-you-go programs, or do they have any special offers this month? Find out, and then build an ad proposal against that.

– Josh Gordon, president of SmarterMediaSales.com, , “Do You Have a Recession Sales Strategy? You’d better …” Publishing Executive magazine




On Managing your Financials

  • Really monitor non-payroll spending
  • Establish and enforce budgets
  • Curb non-essential spending
  • Get rid of the supply closet, or start managing inventory
  • Negotiate supplier concessions
  • Ask your suppliers for advice
  • Look for alternatives to capital spending
  • Streamline your processes
  • Innovate and use your savings to fuel growth
  • Implement a cost-cutting tool such as e-procurement

– 10 Secret Strategies to Recession Proof Your Business, Executive Whitepaper, Coupa.com

On Fostering Customer Loyalty

“Allocating budget dollars toward existing customers is even more critical during an economic slowdown. In a down economy, loyal customers are your No. 1 asset because they provide the highest marketing ROI. … Uncertainty has led to increasing cost consciousness. Lower prices, discounts or temporary incentives from competitors look increasingly attractive to price-sensitive consumers. That is why it is critical to reach out to your best customers and reinforce your value proposition. You can provide tailored products, services, messages and offers. The goal is to redirect the mindset from “who has the lowest price” to “who provides the best value.”

– Tom Shirkey, Founder and President, Loyalty Advantage, DM News, Jan. 26, 2009, page 6

On Succeeding in the Retail Business

  • Improve merchandise efficiencies with regards to inventory knowledge – identifying items that are not moving and liquidating them rapidly and investing those dollars into styles that are moving
  • Adopt planned pricing method to unload stock through scheduled markdowns
  • Cultivate customer loyalty to improve the odds of getting repeat sales. Service your customers as never before, by knowing who they are and what they want, again by utilizing your technology.
  • Improve employee productivity
  • Install tighter loss prevention systems
  • Increase sales through channels of retailing. Expand into multiple channels and different ways of selling your products.
  • Be in-stock with the right merchandise for customers
  • Get back to basics, back to your core products and go with your strengths as retailers. Outsource specialized needs so you can focus on your core strengths
  • Make sure you are looking at the three ways to increase your sales: getting new customers; getting current customers in the store buying more often; and getting customers to increase their average purchase size.
  • Make sure you know how to use the system that you have today to do that and more. Invest in technology for the long term, knowing that it will repay itself.
  • The foundation of every successful retailer is to have “the right product at the right price at the right location at the right time.”

– Succeeding in the Retail Business During Economic Stress, by Kevin McAdam, Published by One Step Retail Solutions

On Developing Marketing Strategies

  • Research the consumer
  • Focus on family values
  • Maintain marketing spending.
  • Adjust product portfolios.
  • Support distributors.
  • Adjust pricing tactics.
  • Stress market share.
  • Emphasize core values.

– John Quelch, Harvard Business School, Marketing Your Way Through a Recession

“When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends.”

– John Quelch, Harvard Business School, Marketing Your Way Through a Recession

On Planning for Economic Recovery

“Even in the midst of a downturn, make sure you prepare for the rebound. Start planning as soon as possible for how you are going to gain share and differentiate from your peers. And while you are at it, use the slowdown to build even stronger relationships and differentiation with your customers.”

– John Chambers, Chairman and CEO, Cisco (Inc. Magazine, Jan/Feb 2009, p. 77)


Compiled by PowerHomeBiz.com

George Rodriguez

George Rodriguez is a writer for PowerHomeBiz.com. An entrepreneur with experience in running several businesses, he writes on various topics on entrepreneurship and small business.

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Category: Business Survival

George Rodriguez

About the Author ()

George Rodriguez is a writer for PowerHomeBiz.com. An entrepreneur with experience in running several businesses, he writes on various topics on entrepreneurship and small business.

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