The British Chamber of Commerce and other business and financial institutions are forecasting a recession for the UK economy from Q4 2022 through 2023.
Annual expectations for GDP growth also continue to flatline in 2022, significantly below the 7.4% growth recorded in 2021.
Businesses and consumers will continue to face exceptionally high costs as rampant inflation spirals upwards in 2022.
Consumer Price Index (CPI) inflation rate is expected to reach a peak of 10% now the energy price cap has been implemented for businesses and consumers.
But this does not take into account the recent weakness of the pound and the possibility of interest rates hitting 6% in 2023.
It may not be a recession quite yet, but the economy is in a steady state of uncertainty with fiscal and economic policies seemingly competing with each other.
In uncertain and challenging market conditions businesses have to get creative to maintain profitability and grow.
Here are a few tips:
How to Grow Your Business When the Economy Is Down: Strategies That Work
When the economic outlook is uncertain, it can be a great time to grow your business.
But how do you take advantage of these opportunities? How can you grow your business when there’s so much uncertainty in the market?
The first thing you should do is analyse your competition. Competitors who have poor business models or run out of cash may go out of business or pivot their business. This means there could be more potential customers for your business.
Growing your business doesn’t need to be expensive, growth can be achieved by improving marketing campaigns, sales close percentages and keeping costs under control.
Let’s go through them.
1. Focus on your current customers
Existing customers spend more than new customers, and customer retention costs are much cheaper than new customer acquisition costs. Despite this, most businesses focus their marketing budgets on new customer acquisition.
Getting your customers to buy additional products/services and talk about your products is strategically just as important as traditional advertising.
Offer your existing customers incentives for their loyalty and/or recommend your business to others.
Many customers will look for ways to save money when the economy is down. Many will be more price-sensitive, so you’ll have to offer them a compelling reason to choose your products and services over the competition. One way to do this is to focus on your current customers.
If you have happy customers, they’ll likely recommend you to others. Satisfied customers can help you reach new customers during a recession. If you have happy customers and a good reputation, you can use the current state of the economy to your advantage. Focus on getting customers to spread the word and boost your brand.
2. Offer an exclusive deal
Another way to get your current customers and new prospects to buy from you is by offering an exclusive deal. You can do this online by using a discount code, a special offer only available to your customers or a time-sensitive offer.
Many customers will be looking for ways to save money during a recession. You can capitalise on this by offering discounts on your products and services.
If you are a subscription-based business, you can offer them an extended free trial or a free trial period.
It is important for you to get people to try your products or services and demonstrate the value of your business.
3. Seek New Markets & Channels To Grow
Take at least a day out of your working week and rework your business strategy.
Find possible opportunities for your business. Are there new markets or regions where you can launch your business?
Can your product or service be used for a different purpose or by another sector?
Challenging market conditions should make you think about all possible ways for you to grow sales.
Find out what your existing customers like about your products/services and develop new products from existing products based on their feedback.
Try and find new markets for existing products/services. Research whether your product/service is needed by a different demographic, sector or region or country.
4. Improve Marketing Campaigns
Social media is a great way to grow your business during a recession. This applies to B2B and B2C businesses, so it’s a great way to reach customers in all industries. You can use social media to increase brand awareness, generate leads, acquire customers, and help current customers feel more connected to your business. You can also use social media to find new partners and collaborators.
Probably the best thing about digital marketing is that it is measurable and you can analyse what is working for your business easily.
If you’re planning to launch an ad campaign, now is a great time to start laying the groundwork for it.
This means doing your research, creating a strategy, and creating a timeline for when you want your campaign to run.
You can use Google Trends to get information on what people are searching for now, and you can use Google AdWords to get data on what people are searching for throughout the year.
You can also use these tools to get information on what people are interested in buying. You can use this information to get an idea of what products and services you should advertise.
Facebook, Instagram, Twitter and Linkedin are great ways to reach people and get them interested in your products and services. You can target ads based on people’s hobbies, interests, and professions. You can also target them based on their location.
You can boost your organic search by setting up an ad campaign and using paid ads to boost your search. You can create high-quality landing pages that include your target keywords.
5. Partner with other businesses
Another way to grow your business when the economy is down is to partner with other businesses which have a similar customer base. You can do this with other companies in your industry or partner with other businesses that aren’t in your industry.
Partnering with other businesses doesn’t require a long-term, formal contract. You can enter into a loose partnership by bartering when you trade goods or services directly with another company.
This could be a manufacturer, a wholesaler, a retailer, a service provider, or even an organisation or charity.
You can also partner with other businesses by offering a referral program. You can do this by offering rewards to your customers when they refer a new customer to your business. You can also provide a referral program to your employees and encourage them to bring in new customers.
6. Control & Plan Cash-flow
Ensuring working capital is as high as possible should be a priority for all businesses.
Ensure you perform at least weekly bank reconciliation and cash flow forecasts to ensure you understand all of your current and expected costs.
Run and review weekly and aged debtors’ reports and ensure you are actively pursuing all outstanding debts.
Change your payment terms where possible to ensure the cash is deposited into your account as quickly as possible, offer a discount as an incentive or consider using a factoring company.
All new customers should be credit checked.
7. Reduce costs
In uncertain economic conditions, it is essential for businesses to continually review their cost base and try to reduce costs where possible.
Staffing and building costs are usually the largest, but it can take a long time to find cost savings. To make immediate savings start analysing temporary staff, travel, utilities, marketing, telephony and technology costs.
Review all contracted costs such as insurance and shop around for the best deals.
8. Improve efficiency (Get more from less)
To remain as competitive and cost-efficient as possible, continually review your business operations and try to reduce waste. Look at it from a customer perspective, anything you do that is not delivering value to the customer can be put aside.
Finally, remember that when the economic situation is uncertain, you don’t know when it will pick back up again. It’s essential to be flexible and keep an open mind.
Don’t get too hung up on one strategy or way of doing things. Be flexible, and keep an open mind about how you can use the current state of the economy to your advantage. Keep an eye on how things change and evolve, and be ready to pivot when necessary.