Building a formidable business amid economic downturns

Businesses face declines in sales and profits during economic downturns. While some businesses during this period fail, some do not only thrive but instead become more formidable.

Many of the world’s unicorn companies today emerged from previous economic downturns. As a business owner, it is important to understand that the future is uncertain and unpredictable. Therefore, you need to build your business to survive any economic state, during growth and likewise amid recession.

Build your business like a house. It must be able to survive any storm without jeopardizing your safety. The difference between businesses that survive or thrive during a recession and those that do not is preparation. Here are some strategies to build a formidable business.

Strong business foundation

When everything else fails, your business foundation will be your pillar. The foundation should be built at the start of the business, and if you have failed to do that, it is not too late as there is always a chance to correct the mistake.

Establish a good business plan that will serve as a manual for your business. The business plan will always come in handy whenever you run out of ideas. It will help guide your business in times of crisis.

Be specific about your business goals and objectives. Only start a business with an unclouded vision of a profitable solution to people’s problems. Do not start because everyone is starting one; a bandwagon action will hurt you more than you can ever imagine, especially during an economic downturn.

Employee Appreciation

Employees make a business and not the other way around. Your employees' productivity will determine your business's success.

Presenting Appreciation Awards to your employees is more than just a nice gesture; it's a strategic investment in your company's long-term success. When employees feel valued and recognized, they are more likely to become more productive, provide better customer service, be more innovative, and stay with the company longer.

These awards can be given out at the end of the month, or a year, depending on your business operation. They can be based on performance, behavior, values, and years of service.

Some examples of employee appreciation awards include:

• Employee of the Month/Quarter/Year awards
• Top Performer Awards
• Customer Service Champion
• Years of Service Award
• Leadership Award
• Mentor of the Year Award
• Safety Award
• The Ace Employee
• The Growth Booster Award
• Best Attendance Award

Sometimes, a business may need to furlough or even lay off some employees. While this might be a tough decision, you will need to do everything in the best interest of the company's survival.

For the employees that you keep, do not stop appreciating them. Involve them in the decision-making process so that they can feel included and part of the solution.

Identify and focus on core competence

There is always a competitor for every business, either directly or indirectly. To be a formidable, thriving, and scalable business, you need to identify your core competence.

Ask yourself why prospective customers should leave their current solution and come to you. Once you identify this extra edge, focus on it. Reinvest in your core products and services to better serve your customers and further differentiate yourself from competitors.

There have been instances where products and services have been repurposed by customers. Gathering insights from customers about how they use your product or service and what they value most in your offerings can help you discover a core competence you might not initially be aware of.

Financial prudence

The first rule for business survival regardless of the state of the economy is to never run out of money. Recession usually brings lower sales, which invariably results in less cash to fund operations, so it is vital to always be financially prudent.

The money you save today will serve as your lifeline during an economic downturn, while the habits formed in the process will see you through the crisis.

Implement cost-cutting measures without compromising quality. In simple terms, always find a way to optimize your production and reduce the cost of production without compromising your product or service quality.

This will give you a significant edge against competitors, as you will have a higher profit margin and be able to offer your product or service at a competitive rate during an economic downturn.

If you need financial help, consider loans or grants that can support your business during tough times. However, before signing the dotted lines, read the terms and conditions thoroughly. Let your legal counsel vet it and advise you on the pros and cons of the loan or grant.

Customer-centric

Many business owners imagine the business world as ever-changing. This is a half-truth because it is the customers' behavior that is changing. The change in turn is reflected in business operations, and only those that are sensitive and flexible enough can catch up and remain in business.

During an economic downturn, customers’ purchasing behavior will change, but if you are customer-centric, you will be able to track how best to market your product or service during this time.

Build strong relationships with your customers by prioritizing their satisfaction and loyalty. Exceed their expectations to make them always return.