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Economic recession and downturns in business fortunes are nothing new or unusual. In fact, economic recessions occur with some regularity over time, usually every 8-10 years. Each is an historic ebb and flow of good times, not so good times and just plain terrible times. The art of predicting the “next time” attracts a bevy of prognosticators each with their own library of scientific facts, statistics and often just plain wild ass guesses (WAGs) to support predictions for the future. The watchdogs and self-appointed proponents of doom and gloom forecasted an economic recession to begin in 2017, then 2018 and, when the sky failed to fall on cue, they announced that it was certain to happen at some point but weren’t sure when. It is one of those examples where given enough time, anything can happen. And it has. Enter COVID-19.
As certain as recessions are, community responses to them vary from period to period. One absolute certainty is that COVID-19’s economic impact on the world economy does not look like anything experienced in the past 100 years. As our closed society looks to finding solutions to the virus’s multifaceted impact on our lives, business leaders are scrambling to answer two primary questions: What must do we do to survive, and what must we do to bring back customers and begin to move forward to better economic times?
Survival, that relatively momentary period in a recession, primarily evokes a numbers-oriented solution. Businesses focus on paying bills and employees and securing sufficient capital to implement solutions that will sustain the business long enough to enter the next period of growth and profitability. The pandemic’s impact on the economy has prompted government to provide financial programs designed to help businesses of all sizes to survive. Taking advantage of these programs is critical.
Cash is king during this initial phase of recovery. Approaching current financial partners to adjust repayments and restructuring terms of mid- and long-term debt obligations may free up much needed cash. Responsible financial institutions realize that their own recovery and future viability is directly tied to customers’ success. Emerging from the “Great Recession” of 2008, many experts believed the recovery would be reflective of past economic declines and were surprised that the actual experience was lagging and slow. Long-term debt commitments should reflect the least optimistic predictions of recovery estimates. For now, focus on positioning your business to be present at the starting line when the race for future opportunity begins anew.
Controlling costs is always a fundamental and prudent business practice and, in a recession, cutting non-essential costs is imperative. Fixed costs, expenses associated with operations that occur whether the business is serving one customer or a thousand, are a good place to flush-out inefficiencies. Reducing common expenses that do not hamper mission-critical marketing and business activities can be a source for immediate savings. Utility expenses, unnecessary convenience services and wasteful, ineffective programs that fail to benefit the employer and employees should be targeted for modification or elimination.
Once the economy is reopened, resolve to identify and pivot to a whole new reality. None of us have been here before, a fact bore-out by the lack of experts pronouncing pre-packaged solutions to coming challenges, but some best practiced business fundamentals will prevail. Agility will be an important trait to harness and embrace. Identify and adjust previous strategic assumptions and supporting tactics that clearly do not reflect the new environment. While the goals may be the same, tactics must be adjusted to reflect the expected restrictions on how society fully reconnects after COVID-19. Responding to those restrictions and the changing social courtesies will be important, but initiating business activities and getting back on a path for sustained growth requires a strategy to recover and retain an expanded customer base, improve upon best business practices and establish reasonable and measurable performance metrics that expand opportunities while limiting risk.
Making customers a priority, and providing them with quality service, products and shopping experiences they desire is a marketing strategy that will survive even the most dynamic and disrupted environment and will lead to customer retention, particularly in a trembling economy where consumers can be expected to be more deliberate in how and why they make purchase decisions. Review the marketing spend on traditional media and develop a marketing strategy that effectively utilizes the full menu of collateral including digital, social, traditional and mobile media. Be open to initiate new services that cater to those groups that are sequestered from main stream society. Creating special hours of operation for these customers can be a source of new customers now and into the future. Be open to ideas and willing to gravitate towards creating new and unique core competencies.
Each industry will face challenges to doing business the same way as they did before the onset of the pandemic. The digital and virtual tools that soared in usage during the isolation of society are not likely to disappear. Businesses that learned to sustain operations through utilization of electronic communication during the shut-down have learned some important cost saving and productivity-enhancing lessons that are surely to survive reentry. The fitness and wellness sector may find its customers wanting to continue with virtual, at-home workouts, leaving many brick and mortar gyms lacking sufficient capacity. Consumers will certainly continue to covet the convenience of eCommerce after COVID-19, but few will want live in communities that are devoid of individual character with streets populated by nothing more than delivery trucks. Those who shirk the fear and terror of change, and who work hard to engage creative solutions in the new era, will survive and prosper.
At Junction Creative Solutions (Junction), we have experienced the challenges of economic downturns and recession before and know that in every period of loss, new opportunities for gain emerge.
“I founded Junction in early 2009, just as the economy was slipping into a recession. Developing strategic and creative solutions to take advantage of those opportunities is a hallmark of who we are,” comments Julie Gareleck, CEO & Managing Partner, Junction. “We take great pride in working with our clients to achieve great things, in the absence of economic certainty. If we retool or redesign key strategies, we will find new paths to growing in a sustainable way.”
To learn more about how Junction can help you navigate the new business reality, call 678-686-1125 today!