With our cyclical economy, it's not a question of if a recession will happen again, but when a recession will happen again. There are many voices out there suggesting when the next recession will occur. With the last recession occurring from 2007-2009, many assume that we are due for another. The reality is no one really knows for sure. But what we do know is that there are ways you can prepare your business for such an inevitable event and there are proactive moves you can make to ensure your business comes out on the other side of the recession unscathed (more or less).
A good place to start is to look at other businesses in your industry that have survived the last recession (like Tier One Executive Search!) and see how they managed to stay afloat. We'd like to share our tips for getting your business through an economic downturn. These tips are based upon a combination of research and past experience.
Diversification
A whole article could be written just on the topic of diversification and whether it is a good strategy or not. Some experts argue against diversifying, saying it is best to stick with the core pieces of your business that you are most known for and what you are best at. This may work for a select few industries, but from our experience, diversification is key. Not having all of your eggs in one basket but also not straying off the grand course of your business plan is the fine balance that will get you through the storm. There are many ways in which you can diversify and it might be best to just focus on just one or two at a time:
Diversify by Geography
Recessions can affect countries around the globe in varying degrees. The last recession hit the United States quite hard but we found countries such as China and Germany to be not as affected and this helped to offset the drop in business in North America. Consider expanding your business regionally to avoid a large drop in business.
Diversify by Market Segment
If your product or service can be applied to multiple industries and you are just concentrating in one, it might be time to identify some of these other markets and plan your entry. Recessions can hit some industries harder than others, so having clients or customers in a variety of markets will ensure you continue to get business through hard times.
Diversify by Product/Service Area
As an executive search firm, we wouldn't diversify by selling house insurance, but we might consider diversifying by recruiting certain function areas that we do not currently dabble in. Or offer other sorts of hiring services. Don't stray too far away from your core business, but also be open to some new products and services.
Diversify your Customer/Client Base
If most of your business comes from one customer or client and they get hit hard by the recession, then so do you. You want to make the most out of the customers you have, but at the same time, have more of them to rely on. Try drawing customers from your competitors and allocate more time and energy into marketing.
There's no definitive way of navigating a recession. There are many more excellent ways of combating a drop in business however these listed methods are what we have witnessed to work. Having a plan in place is the best way to start.
