Governments around the world are working hard on both health and economic fronts. They're trying desperately to fight back the escalating COVID-19 (novel coronavirus pneumonia) and its impending impact on the global economy. If like me, you're in regular (non-physical!) contact with the entrepreneur community, you too have likely been debating how can small business best navigate a likely recession.
While central banks have reduced interest rates to near-zero and governments have opened the public purse wide, odds are high for a recession that hits small business hard. The question is really one of "how deep", and of which sectors will be hit hardest.
Yet in recession, many small business owners have the chance to respond in ways that are difficult for a larger enterprise to do. Large corporates may have greater resources, but small business is nimble and able to seek out bright spots in an otherwise down market.
In the current fog of uncertainty, this may feel optimistic, future-focused, and impractical. So, what can we do now to position ourselves and our businesses to withstand the pending economic pressures?
How, when customers are in "wait and see" mode, can we still be of service.
How can we keep employees productive and keep creating value through and for our business?
Counter-intuitively, now is the time to invest in those important things that we've been putting off. These 5 investment areas don't require significant cost, but can be excellent investments of time.
Like it or not, time is now something that many of us have an unexpected abundance of.
1. Agenda-free communication with customers
In growth mode, we spend much of our time selling. It's only natural when there appears to be an abundance of sales to be made. The temptation for small business owners in a recession is to double-down and try extra hard to squeeze sales out of a market that seems to have no interest. This approach may be misguided.
Especially early in a recession, your small business customers likely have as much uncertainty and fear as you do. Now is not the time to be making sales pitches, upping your advertising spend, or generally being seen as trying to capitalize on misfortune.
A couple of days ago, my wife and I were watching a live news conference where the Chief Public Health Officer was re-emphasizing the importance of avoiding large gatherings and travel. At that very moment, an ad came up from Expedia touting its travel booking platform followed by another from Beaches Resorts. Both seemed ill-timed.
Instead, use this time to connect with customers on a personal level. Check on them and ask how they're doing personally. Be there for them without any motivation other than genuine concern and human kindness.
Maybe your customer base is B2C, or otherwise too large to reach out one-to-one. Use email and social channels to connect on issues and topics that aren't commercial in nature. Topics that recognize the humanity in all of us, and the complexity of our needs in times of crisis.
The time will come again for selling. The deeper connections you make with your customers when times are hard will make the eventual selling feel less like sales, and more like a natural extension of a genuine relationship.
2. Processes improvements
Another area that tends to get neglected when business is roaring is process. As entrepreneurs, we do whatever it takes to get the job done. But this can often result in hacked-together solutions and un-documented processes.
With time as your friend, now can be an excellent time to tidy up the mess that good times have left in their wake. Like the morning after an all-night party, it's time to clean up.
Processes are the "how" in your business—"how" you deliver value to your customers. Consider ways you might improve processes in 3 areas:
- Documentation: Make sure you have clear documentation of how you do what you do, so that someone coming into your business anew, can understand and follow your process quickly with little risk of error.
- Elimination: Are there parts of your process that you might be able to eliminate, reduce, or delegate to reduce cost or improve service? Can you free up your own time for higher-order thinking and priorities?
- Automation: Are there parts of your process that you could automate? There is an increasingly robust variety of software services available to small business at a reasonable cost that can take a lot of the repetitive, error-prone tasks off your hands. Zapier, IFTTT, are two general examples, but there are function- and industry-specific tools for nearly every need.
Improving processes in a downturn will have dual benefits. First, it can save you money now by making your business more efficient. Second, when the market comes back, your margins will be improved, sky-rocketing your profit as your revenues rise.
3. Intellectual property assets
Over time, value tends to accrue to businesses that have valuable assets. This used to mean land and equipment. Today, however, intellectual property assets are as valuable as (often more valuable than) physical assets.
In service-based businesses, intellectual property assets can take a variety of forms, but the ones that are most accessible for small business to build out in down-times are systems, products, and content:
- Systems: A system is a specific way of delivering value for your customers. It's your proprietary approach to solving your customers' problems. Use this time to be intentional about your systems and look for opportunities to differentiate them from what others do.
- Products: Now can also be an excellent time to look at your product offering and assess whether it still serves your customers as well as it could. Are there gaps between what your customers need and what you can do for them? Can you fill those gaps directly or partner with someone else who can? Can you improve how you package your offering to make it more valuable?
- Content: Content helps position you as a thought-leader in your field. The obstacle that many raise to producing content is a lack of time. Well, now is the time to invest in creating the type of content that will build your authority and position you as the go-to in your field. This may be different for each person and business, but launching a podcast, writing a book, filming a video series, or developing an interactive diagnostic, are all good candidates. Consider high-value, hard to replicate formats so that by the time you launch, you'll have a head-start over competitors who only then are wise to what you've been up to.
4. New capabilities
Many industries have undergone exceptional transition as technological and social changes reshape how business gets done. Has your business stayed current with the trends impacting your industry? Are there new technologies, services, or capabilities, that customer have come to expect (or will soon) that you're behind on?
Trends like AI, aging population, blockchain, telecommuting, sustainability, mental health, and more, are all examples of areas to look at for ways that you and your business may need to get smarter and possibly enhance your capabilities.
5. Sharper customer strategy
Finally, an economic pause may provide the breathing room to step back and consider whether you've been clear about your customer strategy, if it's drifted, or if it needs updating. Honestly consider important strategic questions, like...
Who, specifically is your ideal customer? (not in broad, demographic terms, but in real, human terms)
What problems does your ideal customer have and what impacts do those problems have on their well-being?
How does your business address your customer's problems differently and more effectively than other alternatives?
The sharper you can be on the answers to these questions, the better positioned you'll be to serve your customers well when they're ready to come back to the proverbial table.
Small business will survive recession
These are difficult, uncertain times. There's no getting around it. As entrepreneurs, we're getting pulled in competing directions...between personal and professional concerns...between near- vs long-term priorities.
If history tells us anything, it's that recessions pass, and markets return to strength. History also shows that investments made by business (even small business) in recession result in out-performance once the market returns compared to those that don't invest.
Use this time wisely. We did not wish for this, but in turbulent times, there is often a hidden gift. The gift here may be time. Something that we all say we don't have enough of.
Take the gift.
Take the time.
Use it wisely and come out the other end stronger and ready for growth.