A crisis is as good a time as any to grow your business
Don't just survive, but thrive in a time of economic recession through a robust, well-planned and balanced strategy for growth.
Keeping the doors open and the lights on in a time of crisis, and particularly when the impact of the crisis is felt most severely in the economy, is a serious challenge business owners face.
Shrinking revenues and fewer opportunities to generate income from new clients and customers impacts on internal budgets, which in turn can mean less spent on marketing and advertising.
But there is a light at the ends of the tunnel - there are many examples of businesses that were wither established in or just before an economic recession, or took steps successfully to emerge from a recession stronger and better-placed than they were prior to the economic downturn.
A snapshot of companies that weathered various storms includes:
Gaming giants Electronic Arts (EA Games)
EA's founder Trip Hawkins took the unprecedented step of leaving Apple - who were on the rise and well-placed to survive any economic downturn - to found a software company in the middle of the 1981-1982 recession.
Hawkins knew that the computer industry would reach huge penetration not only in the business context, but also increasingly in domestic use, and wanted to be ideally placed to capitalise on this growth.
40 years later, his company employs 10,000 people and turns over $5-billion in annual revenue.
Launched in 1975 in the tail end of a 16-month recession during which Americas GDP was at its worst in 20 years, Bill Gates and Paul Allen forged ahead to build one of the most successful computer software businesses ever.
Within a decade of launching, Microsoft went public, with its listing producing 3 billionaires and 12,000 millionaires in the process.
Google & Facebook
Both companies launched right at the start of major economic downturns (1998 & 2004 respectively), and both were launching untried, untested business concepts into a global market that was sceptical, to say the least.
The rest is, however, history as they say, with these two tech giants posting revenues in excess of $50-billion last year… So what are the characteristics that define these companies? What is it that made them successful when many other companies went belly up?
A Harvard Business Review study conducted in 2010 after the Great Recession of 2010, published some interesting findings after analysing not only how many companies thrived once the market recovered, but what the common approaches were that allowed them to do so.
Some of the key takeaways taken directly from the study results include:
- Companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession
- Within this group, a subset that deploys a specific combination of defensive and offensive moves has the highest probability - 37%- of breaking away from the pack.
- These companies also reduce cost selectively by focusing on operational efficiency, but critically invest comprehensively in building their future business by marketing, spending on research and development and adding new assets.
The study reveals the following guidance for business leaders:
- Don’t be too defensive - unilateral cost-cutting measures combined with shrinking investment in R&D, assets and marketing means you may increase profitability but negate growth. And the latter will always ultimately affect the former in time, and give your competitors an advantage.
- Don’t be too aggressive - forcing unnecessary change (possibly from a pre-existing agenda) and making irrational, knee-jerk investments that far exceed financial capacity can be a killer blow. For example, implementing a major rebrand can be hugely costly, and actually do little to drive future growth. The money would, in all likelihood, have been better spent marketing more effectively under the existing brand.
- Find the balance - it’s more easily said than done, but ultimately business leaders need to weigh up cost-cutting efficiency (not necessarily by reducing staff numbers, but by working smarter) with significantly greater investment in R&D and marketing than their rivals. For example, closing down departments or facilities that are underperforming and re-tasking employees from these into growth departments or facilities not only cuts costs (without huge job cuts), but also boosts sales and opportunities for future growth once the markets stabilise.
(Read more on the study at https://hbr.org/2010/03/roaring-out-of-recession.)
These are never easy decisions to make, and business leaders will need all the guidance and help they can get to remain innovative, progressive and build sustainable growth as the situation improves.
Marketing forms a major part of any growth strategy, and digital marketing is an integral part of the overall picture.
For guidance, advice and help on building your digital marketing strategy to help you generate new leads, sales and audience growth, contact our friendly staff today or email email@example.com to find out more.