Recession is a word that gives goosebumps and creates havoc among people. The name itself is so stressful that people and industrialists get worried by only hearing recession. New generations have not seen a recession properly, but some glimpses of the recession were seen during the pandemic. A recession is when economic activities witness a decline in slope and GDP also falls. Job losses, market losses, share losses, and many other situations arise when the recession is arriving. It can be on a global scale or in a particular nation. Many researchers have found that sooner or later recession will be coming back. Recently, even financial experts shredded some light on some updates about the recession. They highlighted that the world is again on the verge of recession as people all around the world are highly spending on luxury and big box stores. In the United States, GDP may decline as per the financial expert analysis.
However, the ongoing pandemic has already established supply network problems. The lockdown, closures of industries, climate change, war situation in Ukraine, and high inflation rates have made people alter the position and be prepared for such situations in the future. Choosing between spending and cost-cutting is quite tricky during an economic crisis. Many researchers are divided into two sides regarding whether the US will have a smooth landing, inflation rates will come down, and growth will again pick up some speed.
Another side was when some startups were seen making hay while the sun was shining. Some new businesses actually took it as an opportunity and flourished their businesses and operations during the pandemic and economic downturn. They spent more on situations, which resulted in increased brand recognition and market value. A slight increment in the marketing sales budget has helped these organizations to take this downturn as an opportunity. They even retained crucial clients and gained a new and fresh base as well.
Being a leader, one should always be prepared with an action plan in advance. As a business leader, you may face certain challenges during an economic downturn. You should be well-prepared to face business-related risks. Leaders should always think of how to turn any downturn into an opportunity and how to gain advantages and favorable situations during such times.
Do not cut marketing and sales budget
It is true that cost-cutting is the first step to thinking when there is a recession. But leaders need to think about where to apply cost-cutting strategies. A slashing marketing budget might sound good but is not effective. Even with increased marketing budgets, many companies have also turned the table during the downturn.
Investment in customer success
The phrase customer is king is actually true. Because only customers can pull you out of the downturn as well. Loyal customers will always promote your products and services through word of mouth as well even if you are in a non-sustainable situation. Keep relationships healthy and work on enhancing relations with long-term customers with better customer experience.
Operational efficiency
One work that stocks to mind when we talk about recession is cost-cutting. Cost-cutting usually is done by businesses in the name of lay-offs. Companies should focus on enhancing operational efficiency rather than cost-cutting by reducing the number of working people. Layoffs can be mandatory, but make sure the numbers are low.
There is no right or wrong approach for companies to face and sustain in an economic downturn or recession. But there can be some right decisions by top management that can help businesses to regain the lost game and rebuild the roadmap of success for the business.