Talk of the ‘R’ word has been in the media since well before the summer. 

Whether or not GDP actually dips for two successive quarters, meeting the official recession criteria, we need to make sure that our businesses are in the right shape to weather any coming storm.

Whatever happens, we’ve been given a long time to think about it. We’ve not seen the dramatic bank collapses which triggered the collapse in 2008 – the economy has been rumbling for many months. The priority for businesses now has to be to ensure that our operating processes are as robust as they can be. 

When the economy wobbles, it can be natural to want to cut costs. But knee-jerk budget cuts in the wrong areas of your business are never a good plan. 

The sales and marketing budget, for example, is often one of the first to be pared back during tough economic times – mainly because it’s easy to do. However, this approach has a knock-on effect on efficiency. 

A steady stream of new clients is going to be essential for taking your business through the recession, and demand generation – a marketing strategy that includes any activity that drives awareness and interest in your product or service – is the only way you’re going to create that.

So don’t panic, take a little breather, and follow these steps to assess how you can streamline your operations without crippling them.

Prioritise your marketing channels

When things are booming, it’s great to have all channels covered, from digital ads to sponsorship. But if budgets are tighter, you may need to dispense with this omnichannel approach and prioritise. Do not use price as your deciding factor. Just because your digital ads are cheap and can be switched on and off, that doesn’t mean that they are necessarily the most effective channel for your business. Take time to analyse what’s really working, and what’s likely to build your pipeline in the long term.

Focus on the fundamentals for communication

As well as forging relationships with new contacts, communicating with your existing partners, prospects and customers is essential to show them that you’re doing fine and that you’re still there for them. One of the best ways to do both is to use old-fashioned email. Our own research showed that just under three quarters of marketers say that engagement from email marketing has increased in the past two years, and 71% of B2B buyers say email is their preferred method of being contacted. Done properly, email can be a low-cost yet highly effective marketing channel. If you are short of manpower in-house, consider outsourcing to professionals who can guarantee the quality of written communications.

Payment strategies to help SMEs weather cost of living crisis

Do some financial spring-cleaning

This is the boring bit, but now is a good moment to settle any significant debts. Not only will this relieve you of the strain of repayments if margins become squeezed, but it will make it easier for your company to find new investors or more credit if required. At the same time, check how your credit rating is looking and make sure it’s in good order. Maybe open a new, small line of credit that you can easily repay in order to boost your rating. 

And finally, if you have physical stock, pare down your inventory. This is always a fine line to tread, particularly given the current challenges facing the world’s supply chains, but liquidating assets can become near impossible in a severe economic downturn and it’s all too easy to build up unnecessarily high levels when trading conditions are good. 

If a recession begins in earnest, we’ll begin to see companies cutting back on expenses. If we’ve learned anything from previous recessions, it should be that keeping your focus on demand generation is the best way to emerge stronger on the other side. 

Following the 2008 recession, for example, brands which were able to maintain or even increase spending on demand generation far outperformed those who did not or could not. In the years that followed, these brands  saw a 317% increase in their share price. The global average was below 60%. 

Whether or not your business is squeezed in the months ahead, making sure that you are ready to face whatever comes next will be time well spent. So, streamline your operations, prioritise your marketing channels and keep your focus on demand generation – and you’ll be right at the front of the pack when this is all over.

How would FinTech respond to a recession?