As we’ve discussed in a previous blog post, uncertainty is a growth killer. With so much uncertainty about global events (e.g., the trade deal between the U.S. and China, Brexit, Iran and the nuclear deal, etc.) and how those events might affect the world economy, it’s not surprising to hear experts talk about a looming U.S. economic recession.
Global uncertainty coupled with the fact that the U.S. economy is currently experiencing its longest stretch of economic expansion (beginning in June 2009) is a recipe for a downturn. And as economists remind us, “whatever goes up must come down.”
But even if the growth of the U.S. economy slows, that doesn’t mean your business must follow suit. So let’s discuss how to manage business growth in the face of recession fears.
What is a Recession Anyway?
If you could use an Econ 101 refresher, a recession is defined as a period in which the gross domestic product growth rate—i.e., the amount of goods, we as a nation, produce and sell—is negative for two or more consecutive quarters. During a recession, negative growth is accompanied by
- A decline in personal income and company profits,
- An increase in unemployment, and
- A decrease in production, manufacturing, and retail sales.
Also, recessions don’t simply happen. They are caused by events like a financial crisis, the bursting of a real estate or stock market bubble, or some other “black swan” event that rattles the economy.
Recession fears can be difficult to weather for any and all businesses—regardless of size. The reality is, though, recessions are an ordinary part of the business cycle and just as the economy doesn’t go up forever, it also doesn’t drop indefinitely. So it’s imperative that you keep all of this in perspective if you want to figure out how to manage business growth despite what’s happening with the national economy.
Tips for Weathering Recession Fears
Although each business is unique, the following tips for how to manage business growth even with an uncertain economic outlook are helpful for any size or type of business.
1. Do NOT cut back on your marketing budget.
While recession fears often lead organizations to look for areas where they can cut unnecessary expenditures from their budgets, you will want to do so strategically. Otherwise, what little savings you gain could easily disrupt business growth.
One area that often ends up on the chopping block is advertising and marketing. However, making cuts here is almost always a mistake. During a recession it’s not only essential to maintain your current marketing presence, it’s actually smart to consider expansion. Why? At a time when your competitors are cutting back, increasing marketing spend could help increase your visibility.
Additionally, when others are cutting their advertising or marketing budgets, that could result in media offering deep discounts. If nothing else, more space will be available leaving you the perfect opportunity to negotiate for better pricing with print media, radio, and T.V. As always, questions about business growth go back to ROI. If you invest $1,000 on an ad and make $2,500, that’s a positive ROI and you should seriously consider keeping the ad.
- Before eliminating print ads entirely, reduce the size of the ads (assuming they are cost-effective).
- Look for additional free sources of advertising through social and business networking websites.
- Make sure your signage is working for you to bring in more customers (if you have a physical location).
- Create original content, including press releases, and publish at least once each month.
2. Do business with the federal government.
If you’ve been eyeing government contracting as an area to expand your business, now is the time to kick your efforts into high gear. Whether a recession happens this year or early next year or 3 years from now, being in a position to provide services to the government is always a wise business move.
It is true that government agencies are not recession-proof. But regardless of the state of the economy, government agencies still need supplies and services that allow them to provide for the public. It only makes sense to stay aware of government procurement opportunities.
- Look at sections of the federal, state, and local budgets that provide funding opportunities for your products and services.
- Identify the government decision-makers and potential influencers and build out a complete tree of who is involved in the contract award process.
- Keep in mind that the regional or local procurement officer listed on the RFP is not always the end-user, who is usually the manager and staff within the agency.
3. Enhance your relationships with existing clients.
We all know that government contracting, just like private business contracting, is about relationships. With the possibility of a recession coming, it’s essential to focus on making your company invaluable to your current clients. Whether the decision-makers in your industry are government officials or corporate executives, they all have their list of providers who they know, like, and trust.
Maybe you are already a government contractor and you’re wondering how you can increase the work you’re doing with the federal government. Or you’re looking to grow by expanding to support similar clients in the private sector. Regardless of your specific growth goals, you want to make sure you are top of mind with existing clients.
For this reason, building relationships is one of the best ways to prepare for a potential recession. Just think about it: What you do when you need a task completed in your business and you don’t already have a “go-to” person? You call up someone you know and ask for a few names. You want to be your clients’ first call in this situation. If you can’t help them directly, you can strengthen your relationship by suggesting someone who can.
Additionally, we can’t overstate the power of face-to-face and online networking for these purposes. Within the government contracting space and the private sector, there are events organized by associations, industry media, policy or contract briefings, industry conferences, and more. If you see an event, whether in person or online, that connects to whatever work you do, it is a good idea to attend. You never know who you will encounter who you could call on down the road.
- Increase visibility among key decision-makers by offering a webinar series related to the work you do.
- Offer an online course or training session for your target clientele. Managers and staff are often looking to enhance their skills. When a course becomes available, many agencies and organizations have a budget set aside to send employees.
Conclusion: Hope for the Best and Prepare for the Worst
In business, it almost never makes sense to dwell on the worst-case scenario. However, given the current economic situation, it does make sense to adjust your sails. Managing business growth is not as much about anticipating the economic downturns before they happen as it is about taking advantage of opportunities to grow and making sure you’re ready to do so in the future.
For the moment, the economy is holding steady. So there’s no reason to pump the brakes. But keep in mind that even if a recession hits, fear is not a valid reason to pull back. Continue to look at the data and stay the course unless business growth truly is no longer an option.
Need help figuring out how to manage business growth amidst recession fears? Contact the experts at growth[period]. Remember, a slowdown in the economy doesn’t have to mean a slowdown in your business.