The biggest mistake small businesses make during a recession is cutting back on marketing and advertising. This is understandable, as businesses are often looking for ways to save money during tough times. However, cutting back on marketing and advertising can actually hurt your business in the long run.

During a recession, customers are more likely to be price sensitive. This means that they are more likely to choose businesses that offer the best value for their money. If you cut back on marketing and advertising, you will be less visible to potential customers and less likely to be considered as an option.

In addition, marketing and advertising can help you to build brand awareness and loyalty. When customers are familiar with your brand and know that you offer a good product or service, they are more likely to choose you even when times are tough.

I’m not suggesting increasing your expenses, but I am saying to look at reallocating some of your budget dollars and make sure your marketing keeps you top of mind with clients and potential clients.

To better understand this, let's draw an analogy with ice hockey. Picture your business as a hockey team, and a recession as being on the penalty kill. When you're on the penalty kill, the odds are stacked against you, but it doesn't mean you have to play defensively. In fact, it's the perfect time to be aggressive and take calculated risks while others are comfortable or pulling back.

A recession is defined as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP (Gross Domestic Product), real income, employment, industrial production, and wholesale-retail sales.

In the United States, there have been eight recessions since 1960. During a recession, many businesses struggle to survive, but some actually thrive. How can small businesses gain market share during a recession?

Here are some strategies that small businesses can use:

• Identify key economic indicators. Monitor metrics like GDP growth, unemployment rates, consumer spending, and interest rates to gauge the severity of the recession and make informed decisions.
• Differentiate yourself from the competition. Find unique value propositions that set your business apart and appeal to customers even in tough times. Offer exceptional customer service, launch innovative products or services, or provide added value that competitors may overlook.
• Prioritize customer retention and loyalty. Your existing customer base is a valuable asset, and during a recession, they might be seeking more value for their money. Offer special discounts or loyalty programs to encourage repeat business and build long-term relationships. Focus on exceeding their expectations and ensure they view your business as an essential partner even in challenging times.
• Be willing to sacrifice margins in the short term. If necessary, be willing to accept thinner margins temporarily to win over price-sensitive customers. Remember, the goal here is to capture a larger market share and position your business for future growth.
• Expand your target market. Look for opportunities to reach new customer segments or expand into new geographic areas. Conduct market research to identify untapped markets or niches that align with your business's capabilities. Develop targeted marketing campaigns to attract and engage these new customer segments.
• Enhance your online presence. Invest in digital marketing and e-commerce capabilities to reach a wider audience. Establish a user-friendly website, optimize it for search engines, and utilize social media platforms to engage with customers. Consider selling products or services online to increase accessibility and convenience for customers.
• Collaborate or form partnerships. Explore strategic partnerships with complementary businesses to expand your reach and customer base. Collaborative marketing efforts, joint promotions, or cross-selling initiatives can help both parties leverage each other's strengths and attract new customers.
• Focus on innovation and adaptability. Stay agile and open to change. Continuously evaluate your offerings and identify opportunities for improvement or expansion. Adapt your products, services, or business model to meet evolving customer needs during challenging economic times.
• Leverage customer feedback. Actively seek feedback from your customers to understand their pain points and preferences. Use this information to make informed decisions and refine your offerings. Engage with customers through surveys, reviews, and direct communication channels to build trust and improve customer satisfaction.

It is important to note that the strategies you implement should align with your business's specific industry, target market, and competitive landscape. A thoughtful analysis of your business's strengths, weaknesses, opportunities, and threats (SWOT analysis) will help you identify the most suitable strategies to increase market share during a recession.

Here are some examples of growth goals and tactics formulated by the strategies mentioned above:

• A small grocery store can focus on essential items, competitive prices, and excellent customer service to increase sales by 10%.
• A local bakery can expand its customer base by 15% through specialized gluten-free products and a commitment to providing exceptional customer service.
• A SaaS company can reduce customer churn by 20% through exceptional support and exclusive discounts.
• A small manufacturing company can decrease production costs by 10% through lean principles and better supplier terms.
• A fitness studio can increase revenue by 15% through virtual classes, branded merchandise, and partnerships with health food stores.

In summary, a recession is a period of economic decline that lasts for more than a few months. During a recession, many businesses struggle to survive, but some actually thrive. Small businesses can gain market share during a recession by identifying key economic indicators, differentiating themselves from the competition, prioritizing customer retention and loyalty, being willing to sacrifice margins in the short term, expanding their target market, enhancing their online presence, collaborating, or forming partnerships, focusing on innovation and adaptability, and leveraging customer feedback.

The specific strategies that a business should implement will depend on its specific industry, target market, and competitive landscape. However, by following these general tips, small businesses can increase their chances of success during a recession.

About the author

Bill McDevitt is the founder of Top of the World Coaching LLC. With extensive experience in scaling small businesses, cultivating leaders, and unlocking peak potential he is dedicated to helping individuals and businesses thrive. Connect with Bill to discuss your needs and develop a personalized plan for success.

Contact: Website: totwcoaching.com

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Email: bmcdevitt@totwcoaching.com

Note: This blog post has been written by Bill McDevitt, founder at Top of the World Coaching LLC. The content provided is based on personal experiences, expertise, and research.