Three Ways Businesses Can Prepare For Challenging Economic Times

Conor Coughlan, Chief Marketing Officer, Armis Inc. Investor, Author, Mentor, LGBTQIA Activist, Founder.

Although this may not impact all markets, after the IMF reported a rebound in global growth in 2021, global GDP growth is expected to decelerate by 3.2% in 2022 alone.

The alarm bell is ringing: Whether it’s Apple’s alleged plans to slow hiring and spending (paywall), Alphabet and Google’s CEO suggesting the company become “more entrepreneurial,” or Microsoft cutting a small percentage of their employee base (while still reportedly planning to increase headcount), Big Tech sometimes seems to act as “the canary in the coal mine” when it comes to the economy. So now is the time to pay attention.

Let’s take a look at the bigger picture. On a macroeconomic level, Covid-19 and global geopolitical tensions have resulted in uncertainty. According to the Center for Economic Policy Research (download required), “supply disruptions driven by the pandemic and the recent supply shock dealt to global energy prices by the war in Ukraine resemble the oil shocks in 1973 and 1979–80,” which could support the theory that we’re entering a period of prolonged inflation. However, “decades of building central bank credibility and anchoring expectations” are potential reasons to disagree with this theory.

The cost of many purchases has increased significantly, according to the Bureau of Labor Statistics. A Bloomberg survey of economists found (paywall) that they believe interest rates are likely to rise above 3% in 2023 to fight inflation, meaning that maintaining debt could become more expensive. Some business models may no longer be viable. What firms will be impacted?

Unless you are in a high-growth sector that is fueled by increasing demand regardless of the above economic factors, your firm could be affected.

So what does this all mean to business professionals?

In addition to being a CMO, I am also an investment advisor. In an age of uncertainty, I believe firms should pivot to focus on efficient growth, reducing cash burn and building reserves wherever possible. For many, the era of new logo growth at all costs is over. Now you should focus on retention, cross-selling and upselling. Make the most of those expensive logos and customers you have managed to attain.

Efficient growth:

Budgets for many B2B purchases and related average sales price (ASP) could decline, which could lead to longer buying cycles and more decision-makers becoming involved in the process. A pivot to cross-selling and upselling could help to preserve healthy growth levels and maximize returns with existing customers. Diverting spend from large-scale brand campaigns to demand-driven campaigns is key; can you lock customers in for longer-term contracts? Some examples of what you could do marketing-wise are:

• Rewarding clients who pay early or upfront with percent-based discounts on the cost of a service or product.

• Giving value-added ancillary services to clients who take out three-plus-year contracts (which could make the offer more sticky).

• Showcasing the wider value your proposition has to existing clients: Reach out to other divisions or business units. If you are already an approved vendor, why look for new logos when you can “mine” existing ones? It typically costs more to win new business than it does to cross-sell into an existing account.

Reduce burn:

Now is the time to revisit your proposed spending plans, seek out efficiencies, scale back on risky acquisitions and put off big-ticket purchases. Actively seek to minimize spending and optimize return on investment anywhere it makes sense. Limit business travel where it is not necessary.

For marketers at all levels, this could mean doubling down on revenue-focused programs. Repurpose content time and time again. (You don’t always need new content if you can tailor or tweak existing content.) Encourage more digital engagement within your team. Limit off-sites and use local personnel to execute them on a regional level. Seek vendors and service providers that offer lead-generating programs. Leverage your own proprietary content. If you have an array of subject matter experts, why are you paying to sponsor someone else’s content? If you have an amazing partner ecosystem, why not co-sponsor events and campaigns with partners (share the cost of execution)?

Build reserves:

This could include renegotiating your debt with existing creditors or asking for more favorable credit and payment terms. Your business might consider limiting cash bonuses and incentives and keeping salaries low (where possible). Can you ask your customers for more upfront payments?

As with any potential crisis, take the time now to plan for what your business can do if market conditions become less favorable. Don’t wait until it’s too late to pivot.

Is it all doom and gloom? No. Some firms will likely see their book of business and demand increase. Firms that can supply commodities (or alternatives) at favorable rates to businesses or consumers may fare well. If your business positively affects people’s cost of living, you may also do well.

Many firms are “born” out of recessionary times. Make sure you’re effectively demonstrating how you deliver value, driving greater efficiencies, reducing costs or improving the bottom line. Ensure your proposition is really clear and that your customers and prospects can see the demonstratable value you give them. Now is the time to roll out return on investment (ROI) case studies and efficiency reports.


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https://www.forbes.com/sites/forbescommunicationscouncil/2022/08/23/three-ways-businesses-can-prepare-for-challenging-economic-times/