Well, shit. Here it comes. Another recession, downturn, whatever you want to call it. The bottom line: Tough times are coming, even though we’re still recovering from 2020.
In my career as a business owner, I’ve weathered three prior recessions. The first creative agency I founded was at the low point of the dot-com recession in 2003. I sold that in 2007 and started a second agency in 2008—the heart of the Great Recession. Then, on March 2nd, 2020, I acquired Gravitate—two weeks before the COVID quarantine. It’s almost a perfect record! Friends have asked me to tell them before I make any business moves in the future because, surely, something horrible must be coming.
Throughout all these rough times, I’ve come to recognize four primary factors that contribute to a company’s success:
Now, a million variables go into all these focus areas, and every business is different. Still, some high-level principles apply to all companies. Let’s dig in.
At the end of the day, survival means keeping costs lower than income. Let’s be clear, that’s not always possible. At times capital needs to be raised, or debt needs to be accrued, but before you go down that route, take a hard look at every item on your expense list—the Expense by Vendor Summary Report.
For each line item, ask three questions:
– If it’s not 100% necessary, can it be cut?
– Can it be delayed?
– Can it be reduced?
Questions two and three are often overlooked. Many times banks, lenders, or vendors will accept a delayed or deferred payment if you simply ask. Be honest about the situation, because here’s the one thing about recessions, we’re all in it together.
As for reduction, do you really need that “tier” of the software you use, or is there a lower-cost option that would serve just as well? Have you asked for discounts? Get creative on this one.
Aside from budget cuts, you simply have to stop spending on everything that isn’t 100% necessary—lunches and dinners, travel, team outings—anything that doesn’t drive revenue.
If you’ve got a good team, they will understand the cutbacks.
It’s all hands on deck when it comes to sales. No matter what happens in the economy, if you can keep sales up or even grow them, then you’ll be fine. Obviously, that’s easier said than done, so here are a few tactics to consider.
Rally Your Team
Your best salespeople are those who genuinely believe in the work and the vision your company has. It’s times like these that prove why culture is so important. Employees who have faith in the company they work for will fight for it when times get tough. This is a special power; leverage it by encouraging, inspiring, and offering every incentive you can muster.
Rally the entire staff around leads. Encourage them to reach out to their networks, consider people they know, and push for new connections. “We are all in this together!”
Offer instant incentives. For example, we give 3% of the gross billable for any client a team member brings in the day the bill is paid.
Leverage Your History
Whether you’ve been in business for five years or fifty, you have a roster of current and past clients who are primed for your services. What can you reach out to offer them that’s of value? Is there a service you can provide at a discount? A product you can pair with something else for a package deal? Get creative with your offerings and include your staff for fresh ideas and perspectives.
Go beyond that and consider reaching out to clients and partners to offer referral bonuses. This could be monetary or anything motivating. For example, offering to make donations to the nonprofit of their choice can be inspiring—everyone wants to be a hero! It all depends on the individual’s needs and drivers.
‘We’re in this together” cuts both ways. While you may be asking your vendors for leniency, your clients and customers may be asking the same of you. For example, in the early stages of every recession, we have an influx of clients asking for delays or even to cancel contracts. It’s a tough situation.
When these situations arise, dig into your creativity and craft arrangements that benefit both parties. For example, at the beginning of the pandemic, we had a client whose sales relied roughly 80% on their in-person stores and 20% for online sales. When the quarantine was issued, they were forced to shut down every location. In their fear, they thought cutting all marketing—even digital—was the solution.
Digital marketing was their lifeline. They just didn’t realize it.
We had a candid conversation regarding their situation, and in the end, they realized that cutting the marketing for their only remaining income stream would be a bad idea. So we compromised. We offered to continue to do the same amount of work for two months at half the cost to get their sales up to where they could again afford our full fee. Well, that’s exactly what happened, and together we not only survived the pandemic, we thrived together.
That last story speaks directly to the heart of marketing—your lifeline in the roughest times. In the case of the previous client, while the quarantine shut down their in-person sales, it shut it down for everyone. Suddenly online sales skyrocketed because it was the only option people had. Were they not invested in marketing to that pipeline, they wouldn’t have been able to take such advantage of the situation.
There’s a balance between the stability of a diverse pipeline and the profit of specialization. We all have different tolerance levels and drives, so you need to determine what the balance is for yourself.
In a nutshell, a diverse sales pipeline (think multiple industries, multiple products, etc.) equals greater stability. Not all industries are affected by a recession in the same way. Some even thrive. However, focusing on a specific industry and product lends itself to greater profitability.
Digital marketing is the most effective, efficient, and scalable way to diversify or focus. Full stop.
Digital vs. Traditional
Ideally, you continue to operate in both the digital and traditional spheres, but if cash flow is forcing your hand, then traditional is typically the best to cut. At these times, your marketing needs to be as efficient and lean as possible. And to accomplish that, results must be tracked at a detailed level to ensure you gain every inch from every penny spent. This simply can’t be done with traditional marketing.
Within the digital marketing ecosystem, make sure you are leveraging every successful channel to its fullest. For instance, ensuring that your Search Engine Optimization (SEO) game is strong will help you weather any storm. SEO is the foundation of successful organic marketing. Social media, both organic and paid efforts shouldn’t be overlooked either. You’ll find warmer audiences, and thus, warmer leads within your own following. Not only that, if the avenue suites you, influencer and partnership marketing have been on the rise since 2020. Look at everything, and look at it holistically. Your marketing should work together in harmony.
If you’re afraid of the situation, so are your competitors. If you’re considering cutting marketing, so are they. This not only means prices go down for such metrics as cost-per-click (CPC), but your ability to cut through the noise is greater simply because there’s less noise to compete with. It’s the ideal time to jump ahead of the pack.
Fortitude includes not freaking out. You must stay calm to make good decisions. One simple tactic to stabilize yourself is to brainstorm every option for dealing with the challenge, even the dumb ones. When you have options, you can make intelligent choices. And your brain gains some needed confidence.
Protect your emotional and mental strength at all times. Do not run the risk of overestimating your grit! Stay close to the work that is most profitable and most enjoyable.
If you’re a visionary, reaffirm your vision! Focus on the end goal of where you want to be when the tide turns—because it will turn. If you’re not a visionary, here’s an opportunity to try your hand at it.
Remember, this too, shall pass. Focus on this anytime the stress begins to overwhelm you. Recessions are not permanent. This is all about who can weather the storm. Grit your teeth, gird your loins, and dig in.
Beyond everything, get creative!