A downturn is often when business leaders reduce spending to weather the storm. Such an approach is not conducive to growth. The leaders that trim costs but invest in the right initiatives will be those that scale during a downturn. Those who reduce spending too much may survive the downturn but will likely struggle to thrive after it.
So, you need a solid plan for scaling your business in a downturn. With it, you can minimise the impact of a downturn on your business and make sure that you weather the storm.
Resist the urge to cut marketing spend completely
The first thing many leaders do when faced with a recession is to cut costs in the fastest way possible. The marketing and advertising budget are often the first to be cut or removed entirely, but doing so is not always a wise decision. Continuing your marketing efforts through a downturn, rather than cutting costs and bunkering down, enables you to grow your business while your competition stagnates.
A significant reason is that your competitors will feel compelled to do the same thing. With little advertising from your competitors, your business has more space to find cut-through and bring on new business.
You might not have the budget to continue marketing and advertising in the same cadence as before. So, if you need to cut costs, it might be better to analyse which marketing activities draw the most ROI and focus your spending on those while trimming costs from other activities.
Revisit your products and services
You might decide to halt on creating and releasing new products or services. However, this is often the time when revisiting and updating your offerings can be most valuable. Your customers’ priorities may have shifted in light of market changes and there might be new opportunities to deliver products and services aligning with these.
Like marketing and advertising, your competitors might also be cutting back on their innovations, and you have an open position to sell a new service to your existing customer base and bring on new business with your new services.
Revisiting your products and services could also serve as another way to increase efficiency and trim costs. You might streamline processes, eliminate unnecessary steps or introduce new technology. Again, the goal here is to reduce costs and boost efficiency. By making your service offering more efficient, you can free up resources that can be used to invest in other areas of the business or to improve customer satisfaction.
So, if you are thinking of cutting out investments in new products or services during a downturn, think again. It could be the best time to give your business a boost.
Promote people to leadership positions
Employees also tend to be among the first things that go when cutting costs in response to a recession. Some companies avoid layoffs, but they reduce salaries or working hours. Many companies took this route in 2020 at the beginning of the pandemic. However, when threatened by a recession, it is best not to cut down on these in a panic.
Laying off employees or cutting salaries can do more harm than good. Both actions can lower morale; people with reduced salaries may be less motivated to do good work for the company, and laying people off can lower the morale of those remaining.
Loyalty and commitment from your workforce are attributes that you need to survive during a downturn and thrive for many years after. So, I recommend thinking carefully before laying off employees, cutting salaries or reducing working hours during a recession.
Instead, find opportunities to create leaders within the business. You will want to identify people that believe in the business vision and speak up about problems. Doing so creates a few benefits:
- You boost morale by offering your team an opportunity to grow.
- These new leaders surface ideas and initiatives.
- Rather than hiring when the economy rebounds, you have a pipeline of skilled talent within the business.
- Reduce turnover by encouraging people to stay with your company.
Drive digital transformation initiatives
Investing in digital transformation may feel like an avoidable expense, but it can become a worthwhile investment that supports your survival through a downturn.
Here are three reasons why digital transformation is a smart move:
Automation: Technology can automate repetitive tasks, freeing your employees to focus on more important tasks. Automating tasks and processes can free up resources and improve productivity while reducing costs.
Reach: Technology can help you reach new customers and suppliers, regardless of geographical boundaries, enabling you to expand your customer base.
Communication: Technology can help improve communication channels within your business, making it easier to stay in touch with employees, customers, and suppliers. By digitising your operations, you can also make it easier for customers to find the information they need and get in touch with your company.
Resonate can guide your strategy through a downturn
I help B2B leaders define or refine their business strategies. I provide strategic advice and consulting on various facets of strategy; business strategy, corporate strategy, product/service strategy, functional strategy, go-to-market, competitive strategy, pricing strategy, etc.
If you are starting a new role as a business leader, or you have been with the business for a while, and want to improve your business’ strategy, let’s connect, let’s talk. I have extensive experience in guiding business leaders on B2B strategy. I look forward to hearing from you.
