How do you help your company thrive in a recession?
How do you help your company thrive in a recession?
Ahmed Zahran /
12 Rabi’ Thani - 1445
In times of economic recession, the blows are even more brutal and merciless. During the economic recession that shook global markets in 2008, approximately 1.8 million small businesses were closed between December 2008 and December 2010, and this is only what was counted, and there is no doubt that what was hidden was greater.
On the other hand, there were many companies that achieved more profits than they had achieved before, and those who said were right: in crises, opportunities are created. At a time when companies were closing their doors, Macy's opened online e-stores that allowed its customers to buy its products from the comfort of their homes, and other companies found creative alternatives.
How do you think creatively to save your company or project from the danger of recession? This is what we offer you now..
Assessing the situation during an economic recession
First and foremost, you must provide an accurate and specific assessment of the current situation regarding your company or project, know your strengths, weaknesses, and available resources, as well as assess the market with high accuracy. An opinion poll was released on January 18, in which economists from the Wall Street Journal predicted that the rate of economic recession during the current year would reach 61%.
In times of economic recession and times of crises in general, we do not rely on long-term plans, but rather constant readiness to face everything new, as periods of market recession are characterized by permanent fluctuations and unexpected surprises. You should monitor changes as soon as possible, and think proactively to make decisions that keep pace with fluctuations before their effects on your project worsen.
While thinking about solutions to the economic recession, it is necessary to focus on 5 basic aspects, and manage them with great skill, to ensure emerging from the crisis with reasonable profits and avoiding loss. These aspects are:
1. Company management methodology
During an economic recession, there are no fixed methodologies or rules in management, and what was successful before is not necessarily successful now. Rather, it is necessary to read the scene, study the fluctuations, and determine your goals at this stage. What are your future plans? Are you seeking growth or profit? While treating an economic recession, it is necessary to focus on profit and ensuring cash flow in order to be able to continue until the stage of prosperity.
For example, Swvl Company focused on growth in the Arab world, but with the beginning of stagflation last year, the company changed its approach to growth strategies and began planning for profit, and this is what the company’s founder, Mustafa Kandil, said:
“We know we have to make tough decisions to prioritize profitability over growth, to ensure the company thrives.”
Another important thing at this stage is digital presence. There is no doubt that digital transformation is no longer an option now, but its importance increases in times of recession, as it is considered one of the most important means of increasing profits, and this is the path that Macy's resorted to to save itself from the last recession.
2. Financial management and control of expenses
Market fluctuations in a recession are difficult to predict, as is your company's position during these periods, so you must always have cash to be able to spend whenever you need to. If you do not have sufficient financial literacy, you can seek the help of a specialist in financial management so that together you can develop an effective strategy for this stage.
Focus must be placed on steps that provide good cash flow, to ensure continuity and non-stoppage. These things can help you make the right decisions:
- Rationalizing expenses: by controlling necessary expenses and eliminating unnecessary expenses
- Look for options that cost less in necessary expenses, but without compromising efficiency
- Prioritize paying expenses, and avoid paying costs all at once
- Collect money from customers as soon as possible
3. Managing competitive advantage
In a stage of economic stagnation, you must begin to re-analyze and study the market again, and know the needs of customers and what they are missing during the current period, but be sure to collect correct data to produce positive results. If it is necessary to communicate with customers directly in order to be able to understand their needs, here you will know what competitive advantages you must provide in your products.
4. Invest in existing customers
As is known, the cost of obtaining new customers is approximately five times higher than the cost of maintaining existing customers. So, in the stage of treating the economic recession, we focus investment costs on maintaining existing customers, as their presence with you means generating a permanent income stream.
Here are the most important tips to help with this:
- Paying attention to the after-sales stage and providing professional customer service
- Providing special offers or discounts to customers, motivating them to make more purchases
- Focus on earning their loyalty, becoming your advocates, and recommending you to other customers
