Expanding Your Business During a Recession

While no business owner would openly root for a recession, economic downturns can provide compelling expansion opportunities for those companies agile enough to react quickly, and with enough cash on hand to make strategic investments.

As competitors reduce spending and retrench, some well-placed investments in marketing and customer service can position your company not only to withstand a recession and prepare for recovery, but to expand your revenue and customer base.

Preparing to Invest

An economic downturn provides a valuable opportunity to reexamine your business — your products or services, your customer base, your technology and your ongoing expenses — and to make necessary adjustments.

An important early step is analyzing your cash flow carefully to understand how much cash is coming in and flowing out on a routine basis. Identify when invoices are due, and don’t be bashful about collecting payments on a timely basis.

You should examine recurring expenses to identify opportunities to reduce or eliminate some ongoing costs. For instance, more employees working at home means you may be spending less on office supplies, or you may have subscriptions to software or services that you can live without.

Although employees are likely your largest expense, it’s a good idea to try to avoid reducing headcount other than as a last resort. Cutting staffing levels can create morale problems with your remaining staffers, and you will likely face higher costs to replace let-go-workers as conditions improve.

A recession can also be an opportunity to upgrade your real estate. You may be able to move to a more expensive location at a reduced rate, or to negotiate more favorable terms to remain in your current location by extending your lease.

Maintain Marketing Momentum

As you’re trimming expenses, be careful to maintain (or potentially increase) targeted investments in marketing your small business. Short-term reductions in spending now can result in having a reduced pipeline of leads down the road, while increased marketing investments can help you expand market share by taking away customers from competitors who are cutting back.

Instead of reducing marketing spending, it may make more sense to redirect your investments to the channels or platforms that are working well for you. Depending on your customer base, search-engine and social media marketing can be more effective than direct mail or other channels.

Pay-per-click and social media advertising can be a targeted way to help you let prospects and customers know that you are open for business, and could help you generate insights to understand your target market more effectively.

It is also a good opportunity to invest time in creating compelling content that will help you increase engagement with customers and prospects. A restaurant, for example, can post how-to cooking videos or tours of the kitchen and dining areas to demonstrate their cleanliness and their commitment to local health regulations. A retailer can post short videos highlighting popular products or their curbside pickup procedures.

In either of these cases, the videos are designed to help you demonstrate your commitment to customer service and to help you increase your visibility in your marketplace.

Strategic investments, improved expense management, and producing a higher volume of customer-focused content can help position your small business to not only survive a recession, but to expand while competitors are contracting.