History shows that a recession can make or break a business. With so much doom and gloom in the media, it’s easy to assume it’s usually the latter.
Here we discuss the big brands that not only survived a recession but transformed their businesses and grew exponentially.
How did they do this? In short, they kept spending, in the right places.
Recessions tend to start with the fact that people are spending less, and businesses are therefore making less money.
Less money often means panic cost-saving strategies like letting staff go.
Higher unemployment leads to even less spending happening.
So, we end up in a vicious cycle of lack of spend, lack of revenue, lack of money in pockets.
Cutting costs can be a necessary measure in some areas, but here’s where other businesses have previously shown you should avoid cutting the funds…
1. “…When times are bad, you must advertise”
Historically speaking, downsizing, or completely cutting marketing spend during tough times, is often counterproductive.
That said, not cutting spend definitely seems counterintuitive.
But here can lie the opportunity.
Many businesses will cut costs trying to fund their business and hope that the economy improves before they go bust.
Less companies marketing means a less crowded field.
A less crowded field gives you the opportunity to reach people actually looking for your service without competitors getting in the way.
Plus, the cost of advertising tends to drop due to a lack of competition on, for example, Google keywords.
There have been a number of success stories of companies that thrived during the recession due to maintaining spend.
Those success stories include a pre-giant Netflix, who in 2008 worked on partnerships with the likes of Xbox to continue growing. They were one name who increased in memberships whilst other businesses were struggling.
Perhaps it’s time to take their lead and make use of the clearer field.
It could be a saving grace.
2. One business’ loss is your beautiful treasure
Businesses on the brink of going bust, are businesses that sell for prices you can’t ignore.
It’s been said by many tech giants to be a great time to think smart and invest correctly.
Bad times are short lived, but the silver lining of expansion lives for years beyond.
Harvard Business Review have recommendations around investing in businesses that can add value when people loosen their pockets may lead to greater profit margins in the long run.
It discusses how many big tech companies, including Intel and Apple, acquired hundreds of new patents and businesses between 2008 and 2010.
The reason lies in that tech is never going to go away, meaning there’s logic in being ready for when the demand began rising again.
If you’re prepared, you’re likely preferred.
3. Loved people perform
Many businesses turn straight to cutting staff as a quick win for keeping money in their business.
But that’s all it is, a quick win.
Often businesses forget about the long-term effects of cutting staff, such as not being able to keep up with demand when the economy begins to pick up.
These panic button decisions can leave thousands of phenomenal people without work.
And when these people are the cream of the crop talent that’ve been let go from other places, they’re most likely going to do wonders for your business.
It could be good to start with identifying where your business really needs support in order to thrive (or even survive) through the recession and consider getting new employees on board to help.
Staff often get nervous in a recession and will invest their blood, sweat and tears into a business just to maintain their income.
It’s easy to imagine the level of commitment from someone who’s been made redundant and you’re offering them employment.
As mentioned by Vervoe, historically speaking, companies that have continued to hire during a recession have been able to take advantage of the market.
Recessions are nerve-wracking times for any business.
There are a lot of unknowns, but history has been seen to repeat itself.
Things get bad, then they begin to pick up.
Getting creative and thinking about spend in a non-linear way is recommended by many.
There is evidence to show that spending money where necessary (rather than cutting costs) can carry your business a long way through hard times.
Realistically, having a plan Z for what to do when the economy crashes (i.e. a pot of funds you can fall back on) is the most ideal situation.
But if that’s not you, clear the fog from your mind, stop panicking and think logically.
Every business and sector are different.
What may work for one company might not work for you.
So, get as much information as you can before you make decisions that will impact your finances.
Research, research, and research.
You may find that it does wonders for you in the long run.