These are unprecedented times, and most businesses are under extreme economic stress wrought by the COVID-19 pandemic and its myriad implications. Many business owners and management teams are, understandably, fearful. The problem is that adopting a fear-based mindset often leads to a recession of its own making. This is because those who operate from a position of fear bring about contraction rather than growth.
Human nature has programmed us for it: fight or flight. When we’re poised for flight and assume that defensive posture, we do so in an effort to mitigate potential losses and stay afloat. The issue, however, is that these are precisely the actions that will lead businesses to shrink or even fail due to falling revenues and staff layoffs.
Some businesses, on the other hand, not only survive recessions but actually grow during the most seemingly inopportune times. But how? Why?
The difference lies in the fact that some business owners and management teams see crisis as a time of opportunity. And, when you think about it, every cloud does have a silver lining, or at least in the case of business, an opportunity that arises in the face of adversity.
The key is to not act in a reactionary manner. While the instinctive reaction may be to contract business operations and cut costs wherever possible, indiscriminately shrinking your operations will have a counterproductive impact.
Businesses that grow through economic crises double down on their efforts with the understanding that, at this critical phase, it is going to take more time, effort and resources to grow. You may have to work 10 times harder to get more customers. But, if you are willing to work, you will get more customers, while your competitors are losing theirs and losing their staff. Here are my five key strategies for making it happen.
1. Increase your marketing and advertising efforts.
Seasoned leaders know that effective marketing and advertising drives sales. They also know that during a recession, the majority of other businesses, including competitors, will be reducing their marketing and advertising spends during an economic downturn. Opportunity!
This is the time they beef up marketing and advertising campaigns so they come out ahead of their competitors who are, at the same time, cutting and driving their businesses into the ground.
2. Cut the bottom 20% of your customer base.
This does not apply to e-commerce businesses, but all others should take heed. It seems unthinkable. Cut customers at a time like this? Yes. And this is what smart leaders do to thrive. We all have customers who are slow to pay, are difficult or require a disproportionate amount of resources in relation to the revenue they generate. Cut these customers now, because if you increase your marketing efforts, you will attract new business, which will require the very same internal resources now being eaten up by low-yield customers.
3. Offer more help to your customers.
Make a list of challenges your customers might be facing during the downturn. Brainstorm with your team how you, your partners or your vendors can help customers weather the storm better. Reach out to your customers ask them about their challenges and offer help.
If there is anything you can do without blowing up your costs, offer to do it for free (you just freed up some time). Charge for anything that is too substantial, but offer to deliver at a favorable price or with payment terms.
4. Improve operating processes, and deliver a better customer experience.
You have more free time now. Use it to improve your internal processes and the quality of your deliverables, and to create a system to deliver best-in-class customer service. If you are going to come out ahead after this storm, you’ll have to offer best-in-class quality and customer service in a more efficient manner than your competitors. This will dramatically reduce customer churn while increasing your capacity to serve more customers.
Don’t know where to begin? Call your customers, and ask them to rate your products/services and customer service on a scale of 1 to 10. For every answer below 10, ask what would have made it a 10. Collect two dozen responses, and then gather with your team to come up with a list of things and projects you must do to improve. This will ensure that you can succeed in the next critical step.
5. Let go of your worst employees, while assuring the rest of your staff that you are committed to their well-being.
Chances are you have employees you kept around because you needed all the help you could get. However, these people are habitual underperformers; they don’t play nice with others and have myriad other issues. Now is the time to let them go work for the competition (of course, you should have done this much sooner, but I don’t judge; been there, done that).
Fire them now! Your team and your customers will be better off for it.
Now go tell the rest of the team why you did it, and that you love the rest of the team and will do anything, including going into the red this year, to keep them and their health insurance safe. And keep this promise; the future of your business depends on the trust you have with your team.
With an expansionary mindset, an offensive strategy and a proactive approach, your business will not just survive this storm — it can actually thrive.