In this post, we show you how to grow and future-proof your business in times of economic uncertainty. Read on to discover our five expert strategies for sustainable growth.
It’s fair to say that, right now, the economy isn’t the best it’s ever been. With experts warning that a recession is on the way, both businesses and employees alike are preparing to brace for economic turbulence.
From a business perspective, it might seem like layoffs and cutbacks are the only way to survive a recession. But with careful preparation and the right strategies, you can set your business on the path of steady, future-proof growth — even in times of economic uncertainty.
In this post, we share some of these strategies and show you how to implement them. But first: a quick appraisal of the current economic situation in the next section.
Are we in a recession right now?
Technically speaking, the U.S. is not currently in a recession. The general definition of a recession is two consecutive quarters of negative gross domestic product (GDP). GDP reflects the health of a country’s economy — essentially, growth is a good sign and decline is not.
Based on this definition, the U.S. was in recession for the first half of 2022. But by the end of the third quarter, the economy actually grew at an annual rate of 2.6% — effectively leaving recession territory.
Whether this brief period of decline should actually be classed as a recession has been the topic of much debate. Whichever way you look at it, one thing’s certain: We’re in a time of great economic uncertainty.
As Frank Steemers, Senior Economist at The Conference Board, explains: “While economic output contracted for two consecutive quarters in the first half of 2022, a strong labor market means that currently we are likely not in a recession. However, economic activity is expected to further cool towards the end of the year and it is increasingly likely that the U.S. economy will fall into recession before year end or in early 2023.”
With experts predicting that the worst is yet to come, it’s important to prepare for rocky roads ahead. Keep reading to learn how you can both grow and future-proof your business, even in a recession.
How to grow and future-proof your business in a tough economic climate: 5 strategies
According to business growth advisor Jay Abrahams, there are just three ways to grow a business:
- increase the number of clients,
- increase the average value of each transaction, and
- increase purchasing frequency.
And rather than focusing on just one area, Abrahams advises optimizing all three to boost your company’s chances of success and survival.
As you grow your business, you also want to make sure that you’re doing so sustainably. It’s important to take measures to future-proof your business, ensuring you’re well-prepared to weather any economic storms on the horizon.
So how can you both grow your business and make it future-proof? Consider these strategies.
1. Leverage your existing customer base
Existing customers are likely to be your most reliable source of growth, recession or not.
Firstly, customer retention tends to be cheaper than customer acquisition. Winning a new customer can cost up to five times more than retaining an existing one. At the same time, it’s usually much easier to sell to an existing customer — you’re looking at an average success rate of 60-70% versus a 5-20% success rate when selling to a new customer.
Research has also shown that loyal customers are five times more likely to repurchase, seven times more likely to try a new offering, and four times more likely to refer your company to a friend. That’s all three of Abrahams’ growth areas covered.
You can do this by increasing your marketing and advertising efforts towards this particular segment. If possible, allocate a higher budget to customer retention, run special offers and promotions exclusively for existing customers, and consider introducing a membership scheme where loyal customers can collect points and rewards.
Your existing customers can also help you gain new ones. Consider setting up a referral system which incentivizes them to recommend your product or service to a friend.
By focusing on the customers you’ve already got, you can boost customer loyalty, increase purchasing frequency, and potentially win new customers — setting you up for long-term, sustainable growth.
2. Improve the customer experience (CX) from end to end
Staying afloat in a recession means outdoing your competitors. While many other companies likely offer the same (or a similar) product or service, you can stand head and shoulders above the rest if you deliver an outstanding customer experience.
In a survey of over 1900 business professionals, almost 46% said that customer experience is their top business priority over the next five years — making it the highest priority factor overall. And with 86% of customers willing to pay more for a better experience, it’s a no-brainer.
Customer experience (or CX) encompasses the overall experience a customer has with your brand. It’s not just their experience of the product or service itself — it’s every interaction along the way. How easy was it to find the right product? Was the purchasing process smooth? How quickly are queries and issues resolved? All of these aspects — and many more — can make or break the customer experience.
Ultimately, the better the CX, the better your brand reputation. Over time, this will translate into loyal, satisfied customers and more easily win over new ones. As you look to grow and future-proof your business, make sure you have a solid customer experience (CX) strategy in place.
3. Improve the employee experience (EX)
It’s not just your customers who you want to keep happy and loyal. In order to grow and sustain a productive, successful business, you need to retain and engage your employees.
When you hear the word ‘recession,’ you might automatically think of layoffs as a way to cut costs. But actually, whatever savings you might make in the short term are usually far outweighed by the actual (often hidden) cost of employee turnover. Just as loyal customers yield a much higher ROI than new ones, the cost of keeping a good employee is much lower than the cost of finding, recruiting, and training a new one.
As such, improving the employee experience (EX) and focusing on employee retention should form a core part of your business strategy.
Above all, it’s essential to keep communication open and be as transparent as possible. Especially in a recession, fear of being let go will be at an all-time high. Your employees might even start looking elsewhere for their own peace of mind. Be sensitive to how unsettling a recession can be, and do as much as you can to provide security and reassurance.
The more positive your company culture and overall employee experience (EX), the more productive, engaged, and motivated your employees will be. This is critical both for achieving business outcomes and avoiding the hefty cost of employee turnover.
4. Optimize internal operations and processes
If you want to grow steadily while weathering a recession, you need to make sure you’re running a tight ship. Now is a good time to audit and optimize your internal operations.
The key here is to listen to your employees. Run workshops, send out anonymous surveys, and have one-on-ones — whatever it takes to identify bottlenecks and find out where improvements can be made on the ground.
For example, you might curate a list of every paid tool or software you’re currently subscribed to and send it around the company to find out which tools are actually being used (and are considered valuable) and which ones you can replace or cut altogether. Retrospective workshops are another useful tool for improving teamwork and hearing from your employees first-hand what’s working and what’s not.
Optimize at every level: with the individual, across each department, and within the leadership team. Make sure everybody has what they need to do their job as effectively as possible — be it different tools, more streamlined processes, or some training. The time and money you spend on optimizing right now will pay significant dividends in the long run.
5. Iterate and improve before innovating
You’ll often hear that innovation is the key to growth — but sometimes your time and money are better spent on improving what you’ve already got.
We’re not suggesting that you allow your product portfolio to stagnate. However, investing in big new ideas can be expensive and risky. In times of economic uncertainty, a more effective (and much safer) strategy is to refine your current offering to near perfection.
You’ve got a product or service that’s working well. Why not make that product or service even stronger? Gather customer feedback to discover what else they want from the product and what could be improved — then iterate accordingly.
You don’t always need to reinvent the wheel. Small additions and improvements to your existing product can have a significant impact on customer satisfaction (and your bottom line). It’s a more prudent, low-stakes approach with potential for huge returns.
With these five strategies, you can grow your company steadily and sustainably — even in an uncertain economy. Plan ahead, focus on delivering a first-class customer experience, and keep your employees healthy, happy, and motivated. Only then will you be equipped to ride out the next recession.