When the economy is in the doldrums, it’s a natural instinct to assume a defensive position and take steps like managing your cash flow to keep your business moving. But while the idea may be counter intuitive, it’s equally important to plan for business growth during and after a recession.
First, it’s always important to be thinking about how to grow your business—even when it isn’t growing. The world never stands still, and if you become complacent, odds are you’ll be left behind.
Second, in a challenging business environment, you can “grow” just by staying even, if your competitors are sliding backwards. There are more ways to measure your growth than an increase in gross revenue. Other ways include increasing market share and building your customer base, even if their purchases are modest today. Such growth metrics may be even more important in the long run than your current gross revenue trend.
And third, sooner or later, the economy will turn around. Unfortunately, you can’t mark your calendar yet for that date. But when it arrives, change could come very rapidly. Recall that the first of Steven Covey’s famous “seven habits of highly effective people” is to be proactive. Preparing now to capitalize on a turnaround will be well worth the effort.
Ten steps to plan for growth
How can you do it? While some steps will depend upon your unique circumstances, a few general principles apply in most situations. Here are ten:
- Product and service modifications. Think about the circumstances that caused today’s economic difficulties—primary the inability of people to go out and engage in commerce in the traditional ways, and job losses causing a drop in consumer confidence and purchasing power. Even when things begin to turn around, it’s likely there will be a “new normal” with regard to consumer demand for some products and services. Does your vision of a new normal suggest changes you’ll need to make to thrive?
- Review and possibly reinvent your market strategy. Whether or not you plan to modify your product or service offerings, you might need to get customers’ and prospects’ attention in new ways. For example, if many of your customers are likely to be more frugal as they seek to protect or rebuild their savings, stressing a product’s value and durability might resonate better than an emphasis on how contemporary a product’s style is. Or if your customers have become more attuned to the importance of maintaining good health to endure a viral epidemic, a health-themed marketing outreach might be a better way to increase sales.
- Stay close to your customers. Instead of relying exclusively on your own ability to anticipate what your customers will be looking for next or the best marketing strategy to reach them, pull them into the process. “Them” should include both current customers, and those who have been missing in action. Perhaps a customer “advisory board” would be a good way to establish a formal process for seeking input, and also flatter customers enough for them to agree to share their ideas.
- Exploit CRM software. If you haven’t already taken full advantage of the power of a good customer relationship management (CRM) application, now may be the ideal time to do so. The longer you use it, the more insights you can gain about your customers, their purchasing behavior, and their status in your sales pipeline. It can also help you evaluate past marketing tactics, and the best ways to stay close to customers.
- Research new customer categories. When you plan for business growth during and after a recession, there’s no substitute for researching new markets. Are there any you have considered trying to penetrate, but never taken the time to explore? There’s no time like the present… particularly at a time you may need to tap new markets to grow.
Optimize Your IT Infrastructure
- Optimize your IT infrastructure. Beyond exploiting CRM, plan for growth by ensuring that you have strong enough IT systems in place to accommodate expansion. Those include a new accounting software system with cloud-connections, time and billing software, and inventory management tools.
- Secure access to credit. If you are like most business owners, particularly today, you may not have a deep enough reserve to finance the kind of investment you’d need to make quickly to accommodate rapid growth. Whether you’ll need to quickly restock your inventory, buy more production equipment or beef up your workforce, you’ll need financing. A bank probably won’t extend you a lot of credit when business is slow, unless you have great collateral. Rather than starting from scratch with when you look less risky to a potential lender, start having that conversation now to work out their terms in order to get the cash you need when the time comes.
- Start scouting talent. As with borrowing, hiring might not be the right move for you today. However, recall the “war for talent” that only recently cooled. When the opportunity for growth presents itself, have some strong potential recruits poised and ready to join your enterprise. Whether such people are currently unemployed or working for another company, they rarely will object to your staying in touch with them before you’re ready to make them an offer.
- Keep an eye on your competitors. They might also be gearing up for growth, and possibly giving hints of their next moves. Their plans could include making a run at your best customers. It’s hard to launch a growth strategy if you have to start by fending off a competitor’s offensive.
- On your mark, get set, go! The perfect opportunity for business growth is not always obvious. You might face your greatest adversities right before things work out. Whether it’s a new product or better service suited to the times, or launching a drive into a new market, getting ahead of yourself is always a possibility. But the problem could be worse if a competitor jumps in first, and builds a commanding lead.
Planning for growth can have an intangible benefit as well. It keeps you mindful of the prospect of better times ahead. That bit of encouragement can give you an added motivational boost to be ready to resume your path to success.
Editor’s note: We’re here to help. Visit our coronavirus (COVID-19) hub to access the latest information and advice to prepare and support your business.
A guide to growing your small business
It's always important to think about how to grow your business - even in a challenging business environment.
Download our guide for strategies to help you overcome short-term obstacles and prepare you for long-term success.