Depending on whom you ask, the economic outlook for the year 2019 is either “slowing down” or “the worst recession ever.” There are lots of pundits and armchair economists out there with lots of opinions, but the first most important thing to keep in mind is not to panic.
The economy is always cyclical and the boom-and-bust cycles are as natural as the changing seasons. Prehistoric cavemen panicked every autumn because they knew nothing of how nature worked. Eventually, they wised up and found ways to predict the cycles of seasons. Likewise, thinking long-term is the rule of a successful game in business.
Businesses that fail have one common characteristic: being obsessed with short-term gains and short-term survival, they lose the hearts and brains of their businesses. They end up making ill-conceived and stupid mistakes that cost them money and ultimately their own businesses.
As we wrap up the year 2018–10 years after the so-called Great Recession–I’d like to talk about how to recession-proof your business and how your recession-proofing begins and ends with your brands.
What’s your big idea? What’s your big ‘why’?
“Where there is no vision, the people are unrestrained.” — Proverbs 29:18, NASB.
“Record the vision and inscribe it on tablets, that the one who reads it may run.” — Habakkuk 2:2, NASB.
Anyone can run a business. Only you can run your business.
When challenges abound and the daily grinds can be depressing, the most important morning habit you must acquire is to revisit and recite your big idea behind your business, the big “why” that propelled you to become an entrepreneur and got yourself into your industry. As cheesy as it may sound to most people, the difficult times are when you need to reconnect to your passion (or inner genius or sparks, depending on who you talk to) the most.
Ultimately, your brand is a crystallized symbol of your big idea, and your big “why.” If you lose sight of them, you are no longer a businessperson, you are just a freelancer trying to pay another bill. Your customers aren’t drawn to desperate “beggars,” they are attracted to enthusiastic entrepreneurs who provide good values to them.
If your brand documents do not sufficiently and clearly articulate your big idea, it is a good time to do it now. Your big idea translated to a potent brand distinguishes your business from other players in your industry and will give you a competitive edge.
It is too easy to lose sight of why you are doing what you are doing. It’s even easier to lose your way and your soul. Go back to the foundation when you do.
Having a solid vision is important, but a vision is no vision unless you can visualize in terms of 20 years out, 50 years out, and 100 years out. A vision is not to be confused with a short- or mid-term goal. Twenty years from today, how will your dream be expressed into your life? Fifty years from today, how will your business evolve into an institution that makes a difference in people’s lives? A century from today, how is the world a better place because of your business’s contribution to the industry, your community, and society-at-large? (This is why I wrote in the past: Your brand should be designed to last for 15 to 20 years at the very least.)
Have faith. Go all in, go for broke.
“But ask in faith, never doubting, for the one who doubts is like a wave of the sea, driven and tossed by the wind; for the doubter, being double-minded and unstable in every way, must not expect to receive anything from [God].” — James 1:6-8, NRSV.
Doing business is a commitment. Even if you are your own boss, making an unshakable, single-minded commitment honors yourself by establishing loyalty to yourself and your big idea.
The word “commitment” is defined as making a deliberate, mindful decision to go into something that has no way out.
If your mind isn’t singularly focused on building a successful business regardless of — and perhaps in spite of — the outward economic conditions, then your uncertainty and self-doubt become a self-fulfilling prophecy. You cannot be building a business while contemplating an easier way out. More importantly, this kind of inner instability will show and translate to poor quality of service and products, to the manners in which you interact with your prospects, and how you conduct yourself.
You may not be the president of the United States or the chairman of the Federal Reserve Board, but you have complete, total freedom and sovereignty in your mind. Even in the midst of the Great Depression in the 1930s, there were wildly successful businessmen and brands that thrived. And those who thrived through and past the economic downturns were the ones who advertised and marketed heavily, defying all the negative outlook and so-called “conventional wisdom” of the world — because public visibility and continuing customer relationship management projected a very positive public image at a time when everything else seemed to be falling apart.
Faith in yourself, in your vision, and in the Divine Being is not a matter of shifting emotion; it is a conscious action that lays a solid foundation for everything you do.
Focus on your core competency: do a few things and do them exceedingly well.
When a recession hits, it is important to maximize profit margins, reduce expenses, and to ensure the short-term cash liquidity. Many people feel tempted to “diversify” their small businesses, which ultimately ends up becoming a big distraction that takes them from focusing on their key products and on the big idea behind their businesses.
As a small business, diversification is not a feasible method to grow a business. More often than not, they think of just adding one or two extra products or offering a cheaper (unsustainably discounted) product as a loss-leader only to find out that customers aren’t buying more than the loss-leader. These missteps waste your time and end up costing you more money, which also means a narrower profit margin.
Instead, focus on a few things you do very well, and do them exceedingly well beyond anyone’s expectation. Wow the customers and deliver them the best value. Impressed customers will then become your best evangelists, at no cost to you.
Invest your time in relationship-building.
It’s always easier and more cost-effective to build your business on relationship and affinities than gambling your money on ad buys. Word-of-mouth is always the best advertising, and happy customers are the best evangelists you can have.
Incentivize referrals by offering credit toward free products or services to those who bring a certain specified number of new customers to you. Encourage existing and past customers to review your business on Yelp, Google, TripAdvisor, or other consumer review sites (but be aware of the Federal Trade Commission regulations: you cannot offer any material incentives for reviews, you cannot penalize or sue customers for bad reviews, nor can you use your friends or employees (or worse, yourself) as a proxy to leave a fake positive review on those sites!).
Create compelling reasons for spending money at your business.
When the economy slows down, people become more selective about when and where to spend their money. It is, however, important to note that most people won’t be dead broke (even at the height of the Great Depression, 75 percent of Americans were employed) and they will continue to spend some money.
The difference will be that there will be a pretty good reason for them to spend their hard-earned money at your business as opposed to someplace else or not at all.
The first approach, obviously, is to focus on human needs. Companies that produce and market life’s necessities continue to thrive, and those who offer them at a lower price and a better value will be successful. During the last Great Recession in Portland, Oregon, many high-end restaurants folded while food carts that catered to office workers grew to the point where there were thriving food cart pods at many places in the city.
The second approach is to focus on the investment for the future. During the Great Recession, many unemployed workers went back to colleges or trade schools. Vocational training and career guidance industries are likely to thrive when unemployment rates go up. Your business can also grow if you offer opportunities for self-improvement, new skill acquisition, and personal advancement.
The third approach is to focus on the finer experiences in life. When I saw a new Kate Spade store open in a shopping mall when banks were failing, I was shocked. I did not think the shop will survive for more than three months. It’s still there. Paradoxically, when the economy gets tight, some people will spend money, albeit very selectively, on luxury items. The reason? Because at the deep part of our human psyche, nobody wants to feel “poor.” Every once in a while, we all want some finer things in life. That could mean a once-a-month dine-out with your friends at a nice restaurant, instead of eating at a fast-casual dining outlet every day. You pack your bagels and peanut butter to work, but when you and your friends go out for a big dinner at a fancy restaurant, it’s more than just eating; it’s an experience. It restores the humanity, and more importantly, human dignity at a time everyone seems to be struggling to survive. (When I was homeless back in 2004, I had a monthly “ritual” of going to a Chinese restaurant for an all-you-can-eat buffet that would cost $5.95 — when normally I would spend that amount of money over three days. I needed that monthly splurge just to feel human and for the sake of self-care and sanity.) Ultimately, selling the experience is about selling an intangible value that is more than what money can simply buy.
All of the above can be summarized into one simple word: value.
In other words, is spending money at your business a worthwhile action? Will a customer get the best bang for their buck? Value-focused spending means they are not simply burning their cash; rather, making their money have a lasting impact whether that’s a tangible benefit or an intangible experience.