While the rest of the economy is feeling a constriction, adopt an expansionary mindset instead. Other businesses are going to be looking to be on the defensive and conserve cash to stay afloat. There is nothing wrong with this business strategy, and it could be the right play if you are tight on cash or your operations are constrained by regulations. But for most businesses, being defensive leaves opportunities on the table. There are plenty of openings for those businesses that adopt an offensive position and have a growth mindset. Let’s take a look at some of the different strategies your company can apply.
Marketing and Advertising
Start with advertising and marketing budgets. The competition is going to see this as a low-hanging cost to cut, causing ad placement costs to go down. A wise, take-charge business is going to capitalize on this and market themselves more aggressively. This will ensure a larger audience reached and eventually more market share.
Take Advantage of the Available Job Market Talent
Your competition might be looking at this pandemic through the lens of fear. They are laying people off and slimming down their headcount. Their mission is to conserve cash and make it to the next quarter. This is great news for the talent pool and for those companies looking to hire and broaden their knowledge and skill base.
According to Robert Half, the unemployment rate for an accountant was 1.4% in the fourth quarter of 2019. Hiring for strategic roles was very difficult and often pricy pre-pandemic. What you wanted to pay in salary was often not enough to get a skilled professional to leave their steady job. The national unemployment rate as of May 2020 was 13.3%. While 13.3% was not specific to accountants, it does mean that the talent pool is likely flooded with professionals looking for their next steady job.
Think about taking a calculated risk and expanding your headcount. You are likely going to profit from the expanded talent pool. Your new hires are also going to help your business when the increased marketing and advertising pay off.
It is a Good time To Borrow Money
Do you have good banking connections? Great, use them! If your business is able to take on more debt, right now is the time to do so. You should first be confident that you can make a profit as a result of borrowing the money. A strategic line of credit with a low-interest rate could help your business bridge those budget gaps, increase your advertising, and boost your sales funnel. This is an opportunity in the market to borrow the funds you need to seize the moment.
A year ago, the Wall Street Journal noted the Prime rate to be at 5.50. Now in the month of July, the Prime Rate as stated by the Wall Street Journal is 3.25. That means interest is 40% cheaper, on average than this same time last year!
Loans can fund great business investments like increased headcount, buying a building or machinery, or investing in marketing and sales growth.
Before you borrow, do your research. By that I mean that it is important to ask the questions: How much can my business make? What will it cost to borrow this money? What is the difference between these two numbers?
Adjust Your Pricing Strategy
It might feel like business is drying up and it might certainly feel like it is time to slash prices to garner more interest and potentially generate more sales. This thought process is actually counterproductive; cutting prices may hurt your brand especially if you market yourself as upscale or premium. You do not want to degrade customer expectations about your product or service.
Instead of drastically cutting prices all around, maybe discount those long-standing clients who are struggling. This will certainly be at a loss now, but you may garner more trust and appreciation down the road. Make sure you communicate with those clients that this specialty pricing will not last forever.
Examine your pricing structure. Can you move to a recurring fixed fee for some of your services? If so, this predictable pricing will benefit your customers by making it easier for them to budget. Other businesses may be able to get customers to prepay for services, generating cheap capital for growth.
Mastering Growth in a Recession
To pull through a recession profit does not take unlimited funds; It does require proper strategy and a team with an expansionary mindset. Your client base is still relying on you to provide your products and services during a recession. Prepare to be there for them by taking advantage of the positive effects of a recession.
CFOShare helps entrepreneurs take advantage of a recession. With our years of expertise, we can help you analyze your company’s financial situation to create a recession strategy that helps you position your business and achieve your financial goals. Contact us today for a free consultation.