Recession proof your business in 2023
The wind of financial change is blowing and now is the time to protect your business from possible stormy times ahead. Despite strong retail spending in the last quarter of 2022, the looming threat of recession and more rate rises have many people understandably nervous. The way people spend is going to change – and you need to be ready for it.
Here are four ways to prepare your business for the year ahead:
1. Know your numbers
This is the time to complete a thorough audit of ALL your fixed and variable costs. Every dollar saved is a dollar of profit. It might take time and effort – but it can add thousands to your bottom line. I commonly find up to $50,000 of hidden profit sitting in a client’s business in our first meeting, often in forgotten costs. Be honest and ruthless, and cancel anything that doesn’t directly benefit your business this year.
2. Define your business
You need a clear market dominating position to make you stand out from your competitors. Value should be at the heart of all of sales and marketing messaging this year, as this is what customers require before handing over their money. Be careful not to find yourself in a price war with your competitors. This is a race to the bottom and discounting detracts from your value - although I do believe in strategic and compelling offers from time to time.
Find at least three things that are unique to your business and your story and work these into a brand statement that defines your place in the market. It should clearly explain what your business does and why. The why is crucial, as this will set you apart.
3. Increase your prices
Controversial, I know. What if you lose customers? Here’s the truth – prices have increase globally in the past 12 months and I guarantee it’s costing you more now to produce your products or execute your services but you’ve not adjusted your prices accordingly. Every dollar of extra cost you absorb and don’t pass on to your customers is a dollar of lost profit.
A price increase is necessary – and the key is HOW you communicate this to your customers. We all know that fruits and veggies increased significantly last year due to flooding events and labour shortages. And we’ve kept buying those products and accepted the increases (except iceberg lettuce when it was $14 a head!). Customers are aware your costs may need to increase. Just make sure you present the increase in line with the true cost of inflation rather being opportunistic.
4. Connect with your customers
Loyalty is everything in business. “Consumers spend an average of $132 a month with retailers that have earned their fandom, but just $71 a month with non-fans”, Bain and Co research shows. You need to know your target customer (especially if this has changed since last year). Try creating a few customer avatars and use these to focus your actions and messaging. And remember, it costs more to find a new customer than keep an existing one, so make sure you nurture your customer base to keep them loyal. Acknowledge and reward them, use upselling and special offers, keep in regular contact and ensure they know they’re important to your business. Your reward will be their ongoing business.
These are all things any business could and should do – but for specific advice tailored to your business and industry, book in with me for a free consultation, during which I’ll give you some practical suggestions on ways you can protect and boost your sales this year.