“In early April, J.P. Morgan Research raised the probability of a recession occurring in 2025 to 60% — up from 40%.” – JP Morgan
“The New York Fed’s recession probability model suggests there is a 30% chance of a U.S. recession sometime in the next 12 months.” – US News
“Goldman Sachs estimates U.S. recession odds at 45% and is forecasting just 0.5% U.S. GDP growth in 2025.” – Goldman Sachs
Whether these forecasts prove to be true or not, what is certain is the current feelings of uncertainty and instability in business owners, investors, manufacturers, employers and employees. When recessions hit, small business owners are hit especially hard as their budgets as well as their assets and financial gains are thinner, and thus have less ‘cushion’ to ride out the hard times. So what can you do to prepare your small business for a potential recession? How can you survive the up and downs of the economy while still growing your business? And why should your marketing efforts continue despite any economic highs or lows? How can you be creative with your marketing budget during a recession?
Get your Small Business Recession Ready – Just in Case
We don’t know what’s coming and it seems to change from day to day so it’s hard to plan and budget for the next 12 days, much less the next 12 months. So here are some practical tips to get your business ready.
1️⃣ Strengthen Cash Flow and Financial Reserves. Start by building an emergency fund with 3-6 months of operating expenses in reserves. Review where your cash is going and start to tighten cash flows and reduce unnecessary spending. Look over your budget for the coming months, review all subcontractor contracts and renegotiate where possible.
2️⃣ Diversify Revenue Streams: Consider expanding or adding new services, new products, and even complementary services to reach more clients. Explore new markets and look for ways to serve clients in different niches or geographic areas. Think of ways to create recurring revenue while still providing value to your clients with ongoing support plans, monthly services, and maintenance plans.
3️⃣ Strengthen Customer Relationships: Think of new ways to increase customer retention with loyalty programs and client discounts to show them you appreciate their services especially during the tough times. Increase communication with your clients by providing valuable information, insights and check in regularly with key clients. If possible, help out clients who are struggling with flexible payment options or temporary discounted services.
4️⃣ Reduce Debt and Leverage Smart Credit: If possible pay down high-interest loans or credit card, to free up cash flow and reduce liabilities. To prepare ahead of time, secure a low-interest line of credit ahead of time, even if you never need to use it.
5️⃣ Optimize Operations and Cut Waste: If you have product inventory, avoid overstocking and find creative ways to unload stagnant inventory. When purchasing, prioritize high demand items and find the best wholesale prices for those items, while also taking into consideration any additional tariffs that may be added directly or indirectly to your costs. Streamline your administrative processes, your product development, and your service facilitation, by looking for inefficiencies and automate or delegate repetitive tasks.
6️⃣ Invest in Marketing Wisely: Don’t stop marketing, as you need it now more than ever. Now is a good time to review your marketing efforts whether in-house or subcontracted out. What is the exact dollar figure for your ROI? Are you getting what you are paying for? Are you getting leads, website traffic, and social media engagement? But more importantly, are these from your targeted audience? A lead is not a lead if that person is NOT what you would define as a potential customer. Find a marketer who is transparent, experienced, and honest – who can show you concrete results of their efforts.
Surviving the Ebbs and Flows of the Economy is about Mindset
Surviving the ups and downs of the economy as a business owner requires resilience, strategic planning, and adaptability. With owning a small business, there are going to be good days and bad days, but remain determined to ride out the waves and learn from the experience so you are better prepared next time. If you can weather the storm, while many of your competitors will not, you’ll be left standing when the dark financial clouds recede and ready to serve a stronger market again.
Stay informed and keep up with economic news, market trends, and legislative changes so you can prepare. While it’s good to stay informed of the market changes, do not obsess over it and do not waste time focusing on the negative reports. Instead create a plan of action, tighten your budget and be flexible to your business offerings to reach a broader market. Don’t panic! You need to stay calm and positive for your staff, your team, your clients and your contractors. Avoid making knee-jerk reactionary decisions and cuts, but first analyze and calculate the costs for the short-term and the long-term.
Remember this is just temporary and if you’ve been conservative in your spending, creative in your marketing, strategic in customer service with a focus on your brand reputation, more than likely this is just a temporary fluctuation and you will survive stronger, smarter and more resilient. So lead and serve with confidence, to create a sense of stability for your client and your team.
Never Stop Marketing but especially NOT in a Recession
Marketing has an immediate but also a residual impact, so the marketing you do today can create a positive impression in the mind of a potential customer who may not be ready to act right now but keeps you in mind for the weeks and months to come. And while that does not always mean conversion in this very moment, the continual feed of messaging is essential for business growth now and in the future. Marketing is not a one and done game, it’s ongoing, it’s evolving and it should adapt to the current needs of your customers. It’s how you communicate to your leads and customers, its how you show your edge among your competitors, its how you show your value and added benefits of your products and services, and its how you tell the story of the real people behind the brand name.
Communication is about maintaining visibility especially during a recession, when many of your competitors may pull back. Even though, it’s not recommended many businesses will cut their marketing budgets during a downturn, which just reduces competition for your brand. So reach out and capture that market share by creating online conversations when others go silent. And that consistent communication will demonstrate to your target audience that you are reliable, stable and consistent. Your positivity and a message of ‘we’re all in this together’ will leave an impression that will last long after the downturn.
As was the case during the pandemic, ad costs dropped considerably and ROI increased because of decreased competition. So whether you are doing social media ads, search engine ads or traditional ads, take advantage of lower costs and this may be a great time to negotiate the costs with an advertiser. If you are running ads or pushing organic online content, carefully craft your message, as this is a tough time for many so be aware of shifting customer needs and behaviors. Communicate that you are not only aware but understand the challenges your customers are facing in this market. Offer encouragement, positive thinking and ways to endure the hard days. Educate them on the value-adds or the ROI of your products and services, so they feel confident their making a wise investment of their hard earned capital.
Get Creative with your Marketing During an Economic Downturn
Marketing on a smaller than normal budget is all about creativity, leveraging free or low-cost platforms, and maximizing community engagement. Here are some ideas:
Organic Social Media Content: Posting regularly and organically is recommended regardless of the current market. Change up your content from time to time to vary the message and needs of your target audience. With reels, stories, LinkedIn articles, and video content, you can keep your audience engaged and informed how you can help them through these difficult times and how you are personally surviving. Show Client spotlights or successes, with testimonials, and feature how you helped a client much like themselves and how you saved them money or time. Host a Live Q&A or Educational Webinar on Instagram or Facebook Live to further engage them and hear their thoughts in real time.
Content Marketing: Never ever stop adding, revising and recycling content on your website. Every time you post a new article, revise an existing post or page, you are pinging the search engines to say “I am here” and “I am not going anywhere”. The more dynamic your site’s content is, the more trust and credibility you will earn from Google and other search engines. And updating is just as important as adding new content, revisions to a page/post can increase traffic by 106% within 30 days. So make a schedule of going through old content page by page and revising it, adding new stats or research, or updates that make that content more current. Also be consistent with your blogging, posting an article at least once a month if not more.
Email Marketing: “For every $1 spent on email marketing, the average return is $36, resulting in a 3600% ROI.” That statistic has gone up from $8 to $36 for every dollar spent, so email marketing is not dead but still a valuable way to keep the lines of communication with existing leads and clients. And while it’s still bad form (and illegal) to email someone you do not have permission to, email marketing is a great way to establish customer loyalty, increase customer retention and increase repeat sales. Write newsletter content that is not a sales pitch but keep it educational, keep it genuine and talk to the customer as you would as if you were in person with them. Share exciting news, market trends, new products and services, company news, and show how you can be of assistance to them now and into the future.
Social Media Ads: While some platforms charge quite a bit for ads, Meta Business Manager is still fairly affordable and if you choose the ad content, graphics, audience specifications, budget and type of ad, you can reach a lot of people for less than $100 per ad. Call Startup Production if you need social ad management, as we offer very affordable solutions.
Get out there and Network: I know many are still hesitant to attend local networking events, join community organizations or even host/sponsor local events after the pandemic. We all got out of practice of effective networking, so if you are feeling a bit rusty, here are some tips from an older post:
As I said in that article, its good to repeat here: “Networking is an important, no-cost marketing tool that can help put new businesses and small start-ups on the fast track for success. This means networking should be part of every start-up’s marketing plan because it’s the surest way to build alliances with other businesses that will gladly promote your product or service to their customers.”
Hire Startup Production to Manage your Marketing: We are unique as a marketing firm, because we are always looking for ways to save you money. We offer easy-to-use affordable solutions with no contracts, we work on a month to month basis. We can tailor our packages (whether for website design, content marketing, email marketing or social media marketing) specifically to your needs. Before we begin, we can run a full analysis on your marketing efforts to date, where we can audit the results compared to the costs spent and where you need to make changes to increase ROI.
Let’s talk and I promise we will get through these hard times together!
