ON ENTREPRENEURSHIP || Your Business Won't Survive the Recession if Your Team does This
We had it good. Great, even, for the past decade.
We haven’t heard of a downmarket or a recession since 2008. It’s been a bull market for a very long time. Things just flew off the shelves no matter what and almost sold themselves. You can’t blame us for getting complacent and overly positive about the market.
It’ll bounce right back, they say.
Just like when Covid hit, we’ll pivot to working from home, buying online, and getting our groceries delivered to us. But does the government have another round of stimulus cheques ready to hand out? The US has hit their debt ceiling, and the Canadian government had already hit record-high levels of debt per capita of $48,764 in 2020 (inflation-adjusted).
When times are good, people get comfortable. Now, times are starting to get hard, and sadly, most businesses are still operating by the same method as when times were good.
To provide some background context before we dive into a recent scenario I want to share, my marketing agency provides media planning as one of our one-stop-shop services. So, here’s what I observed in recent months. Even though advertising revenue is rapidly declining in the media industry, none of our advertising vendors approached us to sell placements to us in a meaningful way. They just sent us updated prices for 2023.
Is your team spending more time huddling around a whiteboard than out there trying to retain valuable customers as client spends shrink?
In the past half year, our marketing agency has seen marketing budgets shrink by 50% for clients who are running campaigns, and other clients have given up on launching new products this year because they aren’t confident about the market. This means there’s less money to go around for the same number of advertising platforms and vendors. Why aren’t they researching our projects and picking up the phones to sell something relevant instead of just sending us media kits? No one took the time to explain what new products were available and whether there would be any special packages. Zero. Zilch.
Yet they complain about jobs getting cut in the industry. Well, if you aren’t getting creative and staying relevant with your sales pitch, what do you expect?
I had to ask my team to reach out to these advertising reps to see if they wanted to book a time with us to pitch their products to us! So the customer had to tell them to come to SELL us when we’re the buyer with the clients they need. Whenever I recall this memory in the future, my jaw is going to drop. Every. Single. Time.
Show your team how it’s going in the business. Can you afford to keep then big office? Or to keep every staff member for the next 6 months?
If you and your team don’t switch gears and start operating in wartime mode, don’t expect to survive the recession. Job cuts are only the first part. There is a Chinese saying that says, ‘to survive in tough times, you must cut costs and expand revenue.’ If you cut jobs, but everything else is the same as before, you are only implementing part of this simple but very effective equation.
So, what should you do? Here are three things I would do right away.
Make it known to the team that it is NOT going to be business as usual. Let them know times are hard. If possible, share how your business has been impacted. Did revenue drop significantly? Did your supplier or input costs rise by a large portion? Running a business is quite simple, and key levers are really just your income and expenses - how’s that going? Your team needs to know the big picture and how it could impact them.
Use this opportunity to polish your customer service. Your best prospects for tomorrow’s sale are today’s clients. Look at your client roster; if you had to give your team a score on how you serviced each client out of 10, what rating would you give yourself? What rating would the client give YOU?
Make the tough cuts in one go and make it clear to your team that this is it. No one likes the pain of negative change in the workplace, and if you need to cut back on your workforce because you overexpanded during Covid, then do it in one go. Don’t slowly pull off the bandaid. Rip it off. Be clear with your team that this is the hard decision needed to ensure the business survives. Keep your word, and don’t do another round of cuts, or you just look like you didn’t go far enough in the first round of cuts.
Expect economic pain as bank rates make (hopefully) their final increases this year. The impact won’t be seen until the following months when employers realize the market won’t bounce back as fast as they’d hoped, or when businesses can no longer afford to pay the 4X interest compared to last year, and mortgages are due for renewal.
You need to take action now.
