How to Survive a Recessionary Economy - Change Your Strategy in Business

The business environment you operate in has a significant impact on your strategy in business. This is true whether your business is operating during a weak, strong, or recessionary economy.

However, it is even more important to understand your business environment during a recession; which is a time when buyer power is stronger than ever, and business survival strategies need to be quickly developed and launched. Your business needs to change to survive; it can even thrive and grow during a recession providing your efforts are focused on recession marketing strategy planning.

A strategic business plan is typically written for a 5 year period, with annual updates and adaptations. Most small business owners did not foresee the current global economic conditions (actually most large and mid-size business owners did not seeing these conditions coming); therefore, the strategic business plans that were written in a different economic climate are not useful in today's recessionary economy.

To survive a recession, re-visit your small business plan:

* Is your vision statement still relevant? Do you need to revise it for the future you see ahead (although remember that a vision statement is typically a view of the future you would want for your business in the years ahead - it might not change that much).
* Re-define your priorities and re-develop your action plan. If you have available cash, this might be the time to buy new equipment that has been on your capital expenditures plan for two or three years in the future. It is likely that you will get a very good price on that equipment; you're in a good negotiating position right now. If cash flow is a serious issue for your business; what can you do to conserve cash? Does it mean canceling plans to add a new location or launch a new product? Does it mean laying-off staff if you think the business is going to shrink substantially (and if there's nothing you can do to turn it around)? Or consider whether now is the time to look for a partner, or merge with another business, or acquire a competitor?
* Review your line of products or services. Are some of them unprofitable? Some products or services can be used as a loss leader; bringing in other, more profitable business. That can be an acceptable investment if the profitable business covers the cost of the losses, and more. Can the products or services be re-developed to become income earners or is it time to 'retire' the product or service.
* Review your business strategy: Are you a market leader, a follower or a market challenger? A market leader may be able to manage a recessionary environment if its cost structure is highly competitive and if the leader is the best-price option. A market follower might be able to 'cherry pick' the best orders by focusing on business that is most closely aligned to the follower's strengths and uniqueness. A market challenger will likely find a recessionary environment the most difficult; it is expensive to challenge for better market position.
* Reconsider your market strategy: This is the time to do a strengths, weaknesses, opportunities and threats (SWOT) analysis on your business. What impact will a recessionary economy have on your SWOT analysis? Can you capitalize on fragile competitors? That's an opportunity. What impact will swings in interest rates and/or dollar exchange rates have on your business? If it's a negative impact, that's a threat. Is your management structure strong? Do you have effective leaders in your organization? If yes, that is a strength; if no, that is a weakness.
* Develop new marketing strategies; considering the four elements of marketing mix: product, price, promotion and place or distribution.
* Make sure that you develop a daily 'hot list' of business performance measures (also known as key performance indicators or KPIs) because in today's economy you need to know, more than ever, how your business is doing, and the only way to know, is to measure. Customize what you need to know for your business; this might include daily job estimates, daily orders or sales, receivables, inventory reports, supply purchases, number of calls incoming, gross profit margin by customer, and more.

There are marketing and sales upsides to a recessionary economy if you re-develop your strategy in business. To survive the downturns, you need to focus your efforts on adapting and moving forward, quickly.

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How to Survive a Recessionary Economy - Change Your Strategy in Business