We are a few weeks into market volatility and it’s starting to bite. Before we explore how you can future-proof your business through the COVID19 recession, it’s worth taking a critical look at different business reactions.
Where does your business fit and what does this mean for your trading?
All businesses should now critically assess their reaction to the recession
(A) Can't move - stuck
If your firm hasn’t tackled these market adversities head-on, it ultimately means you are doing nothing. If you’re not working harder than before, then I would challenge you to say that you have taken a defeatist attitude.
You can do this.
A passive approach to recessionary pressure is dangerous. It displays indifference to the difficult conditions customers are in, and they could well switch to competitors with more attractive or tailored offerings.
(B) Lower your prices
This approach should be thought through carefully. We get it. But there’s a dangerous world of price wars, and many suppliers will chase narrowed demand.
You might have a natural inclination to provide for price-sensitive customers with discounts or by dropping prices. It’s the age-old conundrum of no revenue vs some revenue.
This might allow you to keep some customers or bring in a few new ones who have previously been more price sensitive.
But think critically if lowering your prices has allowed you to bring on more of your target customers.
Lowering prices can also have damaging effects to your pricing strategy after the recession - it shows that you have great price elasticity. It would be good to time box your price discounts and decreases, giving you the flexibility to revisit pricing once the market returns.
(C) Slash all budgets
The pressure to do more with less is understandable. As the recessionary cycle progresses and marketing activity declines, your company’s position may deteriorate with decreasing sales and shrinking profits.
But try to sit tight for this month and maybe the next and then reassess, constantly reassess.
Be number-obsessed to understand where there is room for adding back in or subbing out if the original slashes were in the wrong place.
Follow your numbers closely, iterate and learn, and encourage your entire leadership team to do the same.
It’s often difficult to determine what’s driving your business ‘muscle’ and what’s unnecessary ‘excess fat’. Are there growth opportunities to explore? Do you now have what you need to go after them?
Whether your approach has or is going to be A, B or C you need to rethink your future proof strategy. Ensure you keep your customers at the heart of your strategy, reorganise yourself to best serve them and then communicate, communicate, communicate.