Many entrepreneurs aren’t sure what to do when times get tough. Sometimes they just stick their heads in the sand. Or, they treat a downturn like a business death sentence and give up. An entrepreneur must watch for early signs of trouble to take immediate steps to protect a business in a downturn.
My husband and I were newly self-employed in 2005, completely unaware of the massive recession about to hit in just a couple of years. What started as optimism quickly became a tough time full of unexpected challenges and difficult decisions. As we rode out the storm, we picked up a lot of valuable lessons on the way.
Here are my top five tips for things entrepreneurs need to do early on to mitigate the challenges of a downturn.
Avoid Cutting Sales + Marketing to Protect Business in a Downturn
Sales and marketing budgets often get cut first because it’s seen as a non-essential cost. However, cutting these activities means limiting the opportunities for meaningful communication between your business and prospects, and can cause cascading issues for your business for a long time to come.
If anything, protect your business in a downturn by doubling down and investing more in your sales and marketing if you’re able. I know it’s tough when you’re watching every dollar. But you might be surprised to find that you’re suddenly very competitive and that there are more opportunities to sell, not fewer.
You can offer a better price or higher-touch service than your bigger competitors, and those big prospects might also be looking to save money right now.
Bolstering your outbound sales team will also show that you’re still there to support your existing customers through these challenging times and shows off your resilience and business stability. This is ideal to show appreciation, ask for referrals, and find out if there is anything else you could be offering customers.
Conserve Cash Where You Can
Marketing budgets are often cut because more essential expenses like salaries and operating costs need to come first. But don’t forget – there are plenty of other ways to be smart with your expenses.
Dive deep into your profit and loss statements and see if there are contracts you can negotiate or discretionary spending you can reduce. Buy in bulk and ask vendors what options they have to help you reduce costs.
Make the minimum payments on your loans and credit cards to minimize the amount of money flowing out. Many times you can reduce your credit card interest rate by asking (I got lazy and did it by chat, I didn’t even pick up the phone tbh).
You might consider requesting an increase on your credit limit or talking to your business banker about getting a line of credit if you’re concerned about meeting basic minimum obligations like your mortgage or lease payments and payroll. Sidenote: talk to your financial advisor – taking on debt is a last resort tactic that will have a long-term impact, and you always want to have a plan for how you’re going to deal with it.
If you really want to know the secret to how to protect your business in a downtown, prioritize people. Difficult times will put your brand to the test internally with your team and externally with your customers and clients.
Internally, it’s crucial to create a culture of open communication and meaningful support. This is even more difficult in a “remote” work environment if you’re not all in the same space. Check-in with your team frequently and see if they need anything – personally or professionally. Get on a video call, look in each other’s eyes. Are they taking care of themselves? Are they healthy? How are they mentally, emotionally?
Yes, they may not be producing at the same level. Everyone is stressed out. Give them some love. As a leader, you have to role model more than ever – walk the talk, provide encouragement, and a reminder of your brand mission where you can. It’s also a good time to reward that behavior when you see it in your team members. Taking care of your team is the right thing to do, plus keeping your people intact means keeping the business and everyone’s livelihood intact. No pressure, I know. But it’s what needs to be done, oh fearless leader.
Externally, people are watching to see if you’re living up to your brand values when the going gets tough. Are you who you say you are? Take a moment to reflect on what actions you can take to embody your brand values in both actions and words.
Reach out to customers. How can you help? Show appreciation. Is your customer service on point? Be as flexible as possible if your customers are hurting right now, too. And communicate, communicate, communicate. If you’re suffering complications, delays, or in any other way struggling, find a professional, honest, and up-front way to tell your customers what’s going on and what you’re doing to make it better. Your customers are going to remember how you made them feel during a crisis – good or bad – and those feelings will dictate their sense of loyalty to you.
Stay Visible and Available to Protect Business in a Downturn
When things become challenging or uncertain, it’s natural to want to shrink away and take a step back. But if you let uncertainty paralyze your messaging, you might signal to your customers that business isn’t ‘as usual’ for you. This could cause your audience and followers to look for support elsewhere.
Continue to communicate like always, and make sure you’re posting on social media, your website, and sending emails regarding any business news or changes that a downturn has caused. Respond to comments and inquiries promptly and answer those phones. It’s important to stay consistent and available so that your customers and prospects know that you’re in business, ready and waiting for them and that you’re here to stay.
A note on crafting messages in challenging times – be genuine. Don’t overpromise. Think and talk more about your customers and what they need than you think and talk about yourself. Provide value and solutions.
Don’t Forget Who You Are – A Leader
In challenging times, people look for a leader. They want to see someone who represents what they need – stability, confidence, and positivity.
Take this time to be open and authentic. Strive to help people feel seen, heard, and supported during difficult times. You can do this by telling your story, being open about the challenges you’re facing and how you’re dealing with them and providing resources for how others can handle the problems they’re facing.
Ultimately, you don’t have to market your business so much as you have to connect with people. Let people know you’re trustworthy and that they can count on you, not just these days, but in times to come. Position yourself as that authority.
We all need to know that it’s going to be alright. And it will be alright. Take it from me – in 2009, we were shopping for groceries at our local dollar store. My two-year-old son was diagnosed with a brain tumor that year, and I was diagnosed with Rheumatoid Arthritis. I’d started a business in 2005, just as my husband started a career as Realtor, and we all know how real estate went in the Great Recession. Kaput. It was… not good.
We now lovingly refer to that phase as the time we “blew it all up” – we moved our businesses into a strip mall, downsized into a tiny condo, and did what we had to do to make it.
And it taught us that we are strong. The difficult truth is that there will always be challenging times as an entrepreneur. But to outlast your competition, you need to stay stubborn, creative, and resourceful. Although you may need to pivot and make difficult decisions– staying resilient, hardworking, and quick on your feet and will always serve you well as an entrepreneur. And you will be an even more AMAZING entrepreneur when you get through this.
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