5 Ways to Sustain Business Growth During a Recession

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Many of the foreboding economic indicators are coming in. US GDP contracted in the first quarter of 2022. The stock market has been plummeting for weeks, most recently entering bear market territory for the first time since the pandemic began in spring 2020 as an aggressive attempt to combat the historically high inflation rates ravaging the country.

All signs point to an economic recession – the first we would face since the Great Recession of 2007-09 (depending on how you view the economic volatility in the early days of the pandemic).

While these are troubling signs for all Americans, they can be particularly unnerving for businesses and their leaders. Recessions can trigger such a significant drop in economic activity that companies in a wide range of industries can face existential threats. However, there are ways to limit the damage.

Here are five strategies companies can use if they want to not only survive but thrive in this severe economic downturn.

See also: How Entrepreneurs Can Survive the Next Recession

1. Considered Consolidation

When customer bases dwindle, profits fall short of expectations, and companies plunge headlong into the red, it can be extremely tempting to begin mass layoffs. After all, recessions understandably trigger a flight-or-fight response in many companies, and executives often find that fast cost-cutting is one of the best proven ways to survive.

I would argue that consolidation, cutbacks, or whatever other euphemistic term you want to use for laying off employees is something that should be viewed with seriousness and a great deal of caution and judgement.

If leadership commits to laying off some of its workforce to reduce overhead and stop at least some of the bleeding, it should be extremely discriminatory when it comes to where those layoffs are coming from. Carefully analyze your organizational structure for things like redundancies and superfluous responsibilities. Find out where cuts can be made without significantly changing day-to-day operations. And perhaps most importantly, don’t initiate layoffs hastily, impulsively, or out of panic and desperation.

2. Advertising and Marketing Expenditure

It’s undoubtedly a cliché, but the notion that great adversity offers unique growth opportunities for individuals, businesses, and other entities has long been valid.

In a time of economic downturn bordering on recession, many companies feel compelled to scale back their marketing and advertising campaigns. This can create a gap in certain industries that the brightest and most ambitious companies are quick to identify and seek to fill.

With all the marketing noise from the competition falling to little more than a whisper, companies going in the opposite — and admittedly counterintuitive — direction of increasing their marketing spend will fill that gap and reach wider audiences than ever before. And while such a bold move may not pay off immediately, it can pay off cumulatively as individuals spend more in the coming months and years after the recession.

See also: How to help a business thrive during an economic recession

3. Improving customer experience

The last thing executives want in turbulent times is for internal turmoil to spill over into their customers and clients. Organizations must be determined to go in the opposite direction and deliver a robust, even flawless, customer experience that doesn’t reveal the seams of what might be happening internally.

This should always start with customer service. Make sure you communicate regularly with clients and customers and that their needs are not only heard, but responded to quickly. If you’re just not sure how your customers and clients feel about your business, try running a customer satisfaction survey. They want to know where they stand and what exactly you as a company can do to sustain your business through the recession and for many years to come.

4. Product and service rationalization

An economic recession can be a good time for companies to review past decisions. It’s possible that certain products and services may not work as well as they did in the past, but executives stuck with them, either out of calcified habit or a dubious expectation that they would eventually recover.

At a time of such fundamental and often irrevocable change as a recession, it might be high time to end the goods and services that are draining your resources but no longer making reasonable profits.

Cutting fat and focusing on the primary drivers of your sales can result in a subtle but important transformation of your workforce: employees and managers are no longer so thinly spread across a plethora of unevenly performing projects, but are able to unleash the necessary cognitive bandwidth generate ideas on how to improve their best products and introduce promising new ones.

See also: How Entrepreneurs Can Win During a Recession

5. Identification of new potential executives

I was going to call this “keep morale up” but I wanted to reach for something more specific that gets discussed less often. While raising awareness and improving the morale of your employees is always crucial – not least during an imminent recession that could negatively affect them in myriad ways – a less commonly announced action is identifying new potential leaders at your company. Look for the kind of employees who are confident, outspoken, and consistently self-possessed, and who others can rely on for their composure when frustration runs high and uncertainty abounds.

Once you focus on these people, start building relationships with them. Cultivating leadership internally can be highly beneficial for a variety of reasons. Empowering employees to express their leadership qualities helps to keep the above morale high, strengthens communication within organizational hierarchies and between departments, and reduces turnover. With a few exceptions, the more executives a company has, the better off it is to be successful over the years.

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