Jason Saltzman is an experienced entrepreneur and business writer. He is the CEO and co-founder of Relief, a financial wellness app.
Most of today’s mainstream economists are increasingly warning about the likelihood of an impending recession. Whether driven by the inflationary effects of the pandemic recovery or overvalued tech companies, it seems clear that many Americans will face economic hardship in the coming year as we head into the crisis.
Bank of America predicts that the economy could enter a period of contraction by March, with most corporate CEOs bracing for tough times (as seen in recent waves of layoffs).
The good news is that hard times don’t necessarily have to be negative. In fact, many businesses thrive—counterintuitively, perhaps—as a result of being creative in the face of new constraints and obstacles. For example, nearly half of the Fortune 500 companies were created during a recession, according to Morgan Stanley.
Difficult times also have the advantage of encouraging new ideas, creativity and space to try out new approaches. Consider Netflix, which in 2007 switched from its original business model of sending DVDs to streaming services, just as the global economy went into freefall. Many expected Netflix to collapse when the economy tanked—only to thrive as more people faced with job losses and a tough economy began spending time at home and found the $8 a month subscription price an attractive entertainment expense.
I learned that there could be an opportunity for a challenge firsthand during the economic downturn of 2008 while building my first business. In the years since, I’ve learned a lot about resilience and what it takes to get through tough economic times.
Here are some key steps to keep in mind to prepare for potential storms to come.
Cut unnecessary costs. Carefully review your company’s budget and expenses and identify areas where you can cut back without negatively impacting your business. This could include things like cutting back on travel, reducing employee benefits, or renegotiating contracts with suppliers.
Invest in technology and automation. Investing in technology and automation can help you streamline your operations and reduce the need for manual labor. This can lead to cost savings as well as improved efficiency and productivity.
Diversify your sources of income. Diversifying your income streams can help reduce your dependence on any one source of income. This may include expanding product or service offerings, entering new markets, or exploring new business models.
Develop a culture of innovation. Fostering a culture of innovation within your organization can help drive growth and adaptability. This may include fostering an open-minded collaborative environment and providing opportunities for employees to share their ideas and suggestions.
Prioritize customer retention. Retaining existing customers can be more profitable than acquiring new ones. Focus on providing exceptional customer service and offering value-added products or services that keep your customers coming back.
Ultimately, the organizations that figure out how to thrive in challenging times are the ones that embrace change, not try to run away from it or bury their heads in the sand. This requires bringing your team on board every step of the way and building a culture that encourages collaboration, innovation and new ways of working.
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