Over the last few years, businesses have faced unparalleled economic uncertainty and volatility making profitability, revenue, and growth more important than ever. Persistent inflation, supply chain issues, and global crises have forced companies to prioritise agility and develop recession-proof business strategies.
As uncertainty remains the only certainty, experts at Vendavo have outlined how businesses can prepare for any economic state, especially a recession, and why this preparation has never been more important.
What can businesses do to be prepared for another recession?
Throughout history, the most resilient firms during recessions focused on the right mix of mindset, behaviour, technology, and efficiency by:
Taking measures to be prepared is one of the most crucial ways businesses can help avoid feeling the immediate and long-lasting impact of a recession or economic downturn. As preparation can also help avoid short-term reactionary steps, there’s still a chance to not only thrive but also gain new customers while retaining existing ones.
What should businesses do to plan for a recession?
Focus on the fundamentals: As a business grows, naturally new products and services follow. However, in the face of a recession, it’s a good time to go back to the fundamentals, focusing on profitable growth. First, reinforce your core products - identify what originally attracted customers and why they chose to stay. Then innovate and make important investments in areas that were not previously prioritised. This will help you prepare for the next ten years of growth.
Listen to your market: In recessions, most buyers change their buying priorities and decision processes to at least some degree. During this time, it’s more important than ever to listen to your market. Explore what buyers value, how they discover it, and how much they can afford to spend. Price segmentation is often very profitable at this point because not all buyers respond the same way.
Gain a deeper understanding of your customers: Your customers will be feeling the economic effects of a recession, just like your business is. Avoid the temptation to dramatically cut prices as this can start a pricing war and impact your ability to run your business but gain an understanding of what your customers need and want. Ask yourself:
Don’t start, and avoid engaging in, a price war: It’s inevitable that some businesses and industries will find themselves cutting prices where possible to retain customers but avoid participating in a price war. Instead, find a way to provide more value for your customers - consider what they need and what they can use - versus automatically dropping your prices.
Most importantly, don’t panic: Businesses will inevitably face recessions, economic downturns, and rising inflation. But it’s important that business leaders and pricing teams refrain from hitting the panic button. Focus on the value you provide your partners and customers to help reinforce the benefits for your marketplace.
