I don’t know about you but I am tired of hearing the word recession. The recession did this, caused that, affected this, etc. Every newscast, every report, every conversation seems to focus on the negative effects of this recession.
A recession or a depression is not uniformly bad to everyone. I never hear any reporter or writer mention how a recession can be an opportunity for businesses. There are a lot of companies that can benefit from the current market condition if their business models are sound.
During recessions, most companies go on the defensive. They cut costs, lay off workers, reduce budgets and try to get as lean as possible. If a business has positive cash flow this is absolutely the wrong approach to take. Businesses that downsize look at the recession as a bad thing, instead of as an opportunity. It’s all a matter of perspective. Smart businesses refuse to focus on the problems a recession causes and instead look for solutions.
Great companies look at recessions as opportunities to enter new markets and win over new buyers. Buyers do not disappear in recessions like most people think. No. They simply shift their buying behavior. Buyers who once bought clothing at high end retailers like Nordstrom and Macy’s, now shop at discount retailers like Old Navy and Target. The buyers did not leave the market; they shifted where they spent their money. Are there new products or services you can introduce to draw in new consumers who have shifted their buying habits? Take a look at your product and service line and identify three ways you can pull in buyers who previously shopped with your competitors before the recession hit. Take a look at emerging opportunities you can take advantage of.
Great companies are the ones that position themselves to excel in down markets. They ramp up promotions, introduce new products and identify new markets. Smart business owners use recessions as a catalyst to grow their businesses. To grow your business, identify new markets you can enter. If before the recession started you were strictly a business-to-consumer type business, then look to expand your marketplace by targeting the business-to-business sector as well. For example, if you sell fishing gear and equipment to consumers, then begin a campaign to sell your products to other retailers. Contact retail chains that sell the same products as you do and become their supplier. Look for new markets like these to widen your buyer pool with minimal effort. What new markets can you profit from in this economic downturn?
One mistake I’ve see a lot of businesses make since the start of this recession is discounting their products. In my earlier example I explained that in a recession a lot of buyers shift their buying habits to discount or cheaper stores in a recession. Some business owners mistakenly believe that to compete they must offer discounts or price reductions on their products and services. This is not true and can be very dangerous. You are not only devaluing your offers but also lowering confidence in your business. Once you start lowering your prices you are creating a new standard for your customers.
Smart businesses know that lowering their prices in recession to stay competitive is not the answer. Instead they add value to their products. You can add an additional report or software to products or tack on additional time periods for services. Or give away free gifts with each purchase. The point is to deliver a quality product and provide great customer service so you can demand your price. In the long term adding value to your products and services will be more beneficial for your business growth. What can you do to add value to your current products or services?
It’s important to look for the silver lining in every cloud even in business. Look at the recession as an opportunity instead of a problem. Smart businesses act in times like these, instead of react. Realize the future of your business is not determined by external events, but by your response to these events. Your business will not fail because of the recession, but because of how you reacted to this recession. Think about what positive things you can do instead of reacting to the recession. How might you profit from this recession?
Whether your company survives or thrives during a recession is within your control. Great companies look at recessions as learning opportunities. They exploit changes in where consumers spend their dollars, look for new markets to profit from, and introduce new products and services that will benefit customers in a down economy. Allow this recession to motivate you to achieve higher profits and take you in new and exciting directions. Look at economic downturns as times when you can soar instead of shrink. It’s all how you perceive it, how you respond to it and how you profit from it. If looked in the right light, a recession such as this can be a blessing in disguise.
Until next time…
Ethan Warrick
Editor & CEO
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