7 Keys to Keeping Your Organization Humming During a Market Contraction

With businesses across a variety of sectors either planning or executing layoffs amid fears of a 2023 economic contraction, it is understandable that business leaders and their teams are anxious right now. After all, inflation is impacting everyone’s bottom lines and budgets, both individuals and businesses alike and some of the biggest companies in the world are experiencing big layoffs. As we move into 2023, it will be more important than ever that your business is planning and executing in several key areas while simultaneously preparing and positioning itself to take advantage of new opportunities. Those key areas are the focus for today’s article.

Keeping your organization driving ahead in a season of economic contraction

Know how your industry is impacted by changes in consumer spending habits.

Even industries that are considered “recession-resistant” can miscalculate how spending habits will impact their bottom lines. People will always need groceries, but they may look for non-premium brands to make their dollars stretch farther. Shoppers who might typically be in the car market as new car buyers may instead decide to repair a car they have or buy out their lease, delaying a new purchase until more stable times. If new home buying slows, the purchasing of new home furniture tends to slow right along with it. If you are not completely clear about how your company or industry could be exposed during an economic downturn, it is critical that you and your leadership team review these aspects of your business and begin adjusting accordingly.

Consider: There are lots of trade association events, shows, and conferences going on right now and all year round. It is a great idea to go to these events and read the temperature in the room. See how other vendors and competitors are reacting to the current market and what they are doing to respond. These can be extremely valuable insights that can help you avoid making mistakes that others already have made.

Remain transparent with your team and clients.

Internally, you always want to be honest and transparent with your teams. Even if the news isn’t great, your honesty is what they need to hear, and it will be both appreciated and respected. Your transparency will help your team feel clear, grounded, and even more invested in the company’s success. They will be able to draw a straight line between the importance of their continued commitment and hard work and the company thriving and will reward you for it with their effort.

Externally, you want to keep the focus on your clients and their challenges. How you can help them be as effective as they can be? Let that question be the guiding light for your team. If you are looking out for your clients and vendors, you are in effect protecting the people and companies that you depend on.

Develop contingency plans in case economic recovery takes longer than anticipated.

Does your business have a plan to survive an economic downturn that lasts for 24 months or more? While typical recessions last about 10 months, there is no guarantee that will always be the case. The 2008 recession lasted 18 months and the next one could be longer. Smart businesses plan for every eventuality by developing multiple plans of action. Even if plans that include deeper cuts than are ever need, having them means you are ready to take the actions necessary to stay ahead of changing market realities, keep the doors open, and your teams employed.

Conserve your cash.

A central aspect of keeping your business moving forward in an economically challenging environment is to ensure you are conserving cash. And yet, you would be surprised to learn just how many businesses I have encountered did not have a 13-month cash report to understand their working capital.

You must understand that most businesses fail coming out of a recession or weak economic environment, not going in one. This is because they do not have the capital to invest and begin to re-grow. I can’t stress how important it is conserve cash as much as possible. Watch your lead indicators to keep an eye on what is happening in your market so that you aren’t being caught by surprise.

CNBC wrote a good article on tips to conserve cash that I encourage you to read if for no other reason than to confirm you are doing everything that you need to do to keep your business thriving.

Encourage all team members to help contribute to business growth.

Everyone that interfaces with your customers and clients has the potential to help keep that customer, get referrals, and to help grow the business. However, they also have the power to drive business away. It essential that everyone on your team is a net positive for the customer experience. So, what’s the best way to ensure a great experience between your clients and your team members?

Even though it may seem counterintuitive, do not hesitate to further train your employees to help them improve their technical and soft skills. Improving their technical, customer service, presentation, and delivery skills can help improve the experience your clients have with your team, which can represent the difference between a retained and a lost client. It can also lead to transformational jumps in productivity. It is an investment in your people that is always worth the cost, especially when measured against the cost of having to train new team members or find new clients.

Invest profits into your sales and marketing channels and training your people.

If you know what drives sales in your business, it is not the time to cut that spending; it is time to strategically invest into those sales and marketing channels. If you can do so, you will be able to scale even during an economically challenging time. If you don’t know what drives sales in your business, now is the time to invest in a strong business intelligence and analytics program that can help provide you with actionable intelligence and direction to where you are putting your money (and where you should not). Do not allow your business to operate blind or based on “gut feelings”. That’s a good way to go out of business.

Consider: If you’re going to invest in anything, it needs to be focused on short term profitability because you may not be able to afford gains a year or two down the road. Your short-term profits are going to provide the money needed to invest in your people.

Keep your customers and clients at the center of all of your decisions.

As I discussed in my last piece for retaining your customers heading into 2023, it is critical to take great care of the customer base you already have first and foremost.

Your most loyal customers serve as your bulwark against disaster in normal times and doubly so during more difficult times. As such, it is important to remain sensitive to their needs and budget changes as they are likely to be feeling the same pressures as your business and are looking for cost savings where possible. Focus on keeping them engaged with your brand, position yourself competitively, and look to help them through their decision-making process. Nurturing those existing relationships will only further increase their trust with your brand.

Make sure that customer satisfaction is high and processes are frictionless. In doing so you ensure that the customer experience is smooth, personal, and that they know they are important to you.

Summing Up

2023 is fast approaching and projections of a soft market have business leaders everywhere paying attention and looking for the best ways to move forward. These keys are some of the very best high-level strategies that you can use to be successful regardless of economic outlook. By maximizing your understanding of your market and the needs of your target audience, conserving cash and investing wisely, being honest with and investing in your team, and by making the experience your clients and vendors with your company your priority at every turn, you will be on your way to not only surviving but thriving in 2023.

If you would like to get in-depth with me and get serious about learning more about my techniques and ways in which you can take your leadership to the next level, my executive coaching programs are extremely popular and come highly recommended. Coach4Execs has the tools to help you achieve growth and exceed your own expectations. Let’s talk.

Georganne Goldblum,
CEO of Coach4Execs