5 Tips to thrive when the Economy is bad

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Fact of life: the economy operates in cycles. There are times of prosperity and thriving economic activity and there are also times of decline and slow economic growth. Small businesses are much more vulnerable to the cyclical nature and downturns of the economy than large corporations are, mainly due to the fact that their resources are far more limited.

Periods of recession usually mean a decline in sales and patronage for businesses, decrease in access to finance, downsizing and pay cuts among other negatives. Many businesses end up going under as a result. However, this does not mean that a recession is the death knell for small businesses. With careful planning and some creativity, periods of recession could actually see your business thrive and make record profits.

When the economy is experiencing prosperity, succeeding in business simply means simply doing on a consistent basis, what has been proven to work. During times of economic decline however, to stay afloat and thrive, an entrepreneur must seek new opportunities, which come up as a result of changes in consumer behaviour.

Consider the fact that some businesses are born as a result of an economic downturn. No matter the economic situation, there will always be opportunities to take advantage of. As an entrepreneur, you must always have an ‘opportunistic’ mind set. This means that you have to be on the lookout for how to take advantage of a situation, and how it might be of benefit to you.

During times of economic downturn, a business must focus on providing value to their customers above all else. This is the time to take a look at who your customers are and identify the reason why they are doing business with you. What is your unique value proposition, and in what way are you different from the competition? In what ways can you innovate and improve upon your offerings? How can you tailor your products and services to meet your customer’s wants and needs, which will likely change due to the decline in their purchasing power?

This isn’t necessarily the time to give discounts or sales to attract customers, as that is not sustainable in the long term. Rather, you must consider strategies that will best serve your clients and provide the value they seek. Although the application will vary from industry to industry, the principles are essentially the same. All you have to do is adapt them to your specific requirements. Below are five things to consider, when the economy ‘isn’t smiling’ as we say in Nigerian parlance:

1.    Focus on the customer experience: even in the best of times, excellent customer service, should not be optional. During a period of recession however, it should be taken beyond the extra mile. A positive experience will keep your loyal customers loyal, and cause them to become your evangelists, we all know what power of word of mouth can do for a business. This is the time to bring out the big guns. Rude and lazy staff, who behave like they are doing the customer a favour should be required to either shape up or ship out. One advantage a small business has over a large one is the personalised nature of customer experience. Capitalise on this and make it one of your unique selling points. Strive to make every interaction with your business, a positive, enjoyable and memorable one.

2.   Consider affordable ways of promoting your business: the tendency is to cut advertising and limit spending on promotional activities during an economic downturn. Doing this however, puts your business at risk of being drowned under the multitudes of competitors out there. Instead, brainstorm on ways you can reach your potential customers, and remain top of mind for existing ones without overstretching your budget. Simple things like strategically placed signboards and flyers, particularly at locations where your target audience frequents, branded shirts for your staff, participation in industry events and trade fairs as well as social media marketing are great avenues to explore.

3.   Consider tailoring your products/services to the realities of the moment: as a result of the changes in the economy, your client’s needs may change. This does not mean that they can no longer do business with you. It may however require that you re-evaluate your strategy, vis-à-vis the current realities, and tailor your offerings accordingly. The focus should be on adding value, as opposed to just offering discounts to entice customers. Many Nigerians will remember when the 10g and 20g milk sachets came into existence, in response to the decline in purchasing power of the middle class, who could no longer easily afford the 400g packs. In what ways can your business readjust to meet the needs of your customers?

4.   Keep a close eye on your operations costs: Now is not the time to be lazy about bookkeeping and the day to day running of your business. How much do you spend on diesel daily? Can it be reduced? What stock moves fast off the shelves, and what doesn’t? Focus on identifying ways in which you can reduce overheads, eliminate unnecessary spending and make your processes more efficient.

5.   Get your staff involved: your employees are an important factor, if your business is to weather the economic storm. Ensure that employee morale is high, and that the focus is on productivity. They might even be able to proffer ideas and solutions to move the organisation forward, if given the opportunity. In some instances, you might have to make the hard decision to downsize. Try to do this with as little acrimony as possible. Also whatever your staff strength, ensure that everyone on your payroll can fill more than one function, so that if a gap is created because someone has left, or is ill, the business does not suffer as a result.

Staying afloat during times of economic difficulty can seem like a major juggling act, but maintaining a positive outlook is crucial. For the entrepreneur faced with periods of decline in business, keeping a hopeful and proactive attitude, will help your employees, and suppliers remain confident in your ability to pull through. Also, every decision made concerning your business should be the result of well thought out facts, and not a reaction to panic and fear.

Weathering recessions may be challenging, but with the right attitude and decisions, it is definitely doable!

Content provided by Chinazo Okoye, EDC

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I am Nigerian :)

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