How to Ride Out a Recession
By Clare Flynn
The natural instincts of most businesses, is to pull in their horns when a
recession looms. Just as we consumers are now abandoning the high street and
reveling in frugality, so many businesses lean towards cutting costs and
This is a big mistake.
Great companies always outperform their competitors during hard times. They
seize the opportunity to grab market share by continuing to invest in their
customers, their products and services and keep a long -term focus.
Whilst many companies go to the wall during recessions, history is rich with
examples of those that built unassailable gains and rode to greatness in these
periods. Some of the world’s most significant inventions and most successful
corporations were born during depressions or recessions. New needs emerge in
such times: Health
insurance was born out of the US Depression as were stereo
recordings, digital computers, Monopoly, sunglasses, ballpoint pens and bubble
gum, to name but a few. Messrs Hewlett and Packard got their products rolling
from the famous garage in 1939. Despite industry in crisis and companies going
under, Fortune magazine, the world’s first and most successful
publication was born at the height of the Great Depression :
this was a counter-intuitive and risky venture at the time, but proved an
Continue to invest – your money goes further
During recessions, when everyone else is cutting back on marketing expenditure
and research and development efforts, the wisest companies continue to invest in
these. They are often able to do so because they managed their businesses
prudently during easier times, keeping costs under control and building a
valuable war chest. This makes sense, as during a recession money goes further,
as suppliers cut costs, and are ready to make deals. For those with available
resources, this can be a great time to get acquisitive. Sadly most firms work
the other way round, spending freely in good times and then savagely cutting
costs when times get tough.
Lavish time and effort on customers
For those companies or small businesses that haven’t built up a war chest, there
are still great opportunities. What they lack in funds they can make up in time
and effort, by lavishing attention on customers. This means spending time to
listen to them and find out how to serve them better; to get them to collaborate
in dreaming up new products or solutions; to look for ways to offer them more
value, rather than lower prices and to find ways to lock in their loyalty.
Keep on advertising
Advertising and marketing is often the first spending victim of recessionary
cost-cutting. It is such an easy budget to slash, but you do so at your peril.
Look for ways to use the money more efficiently, to seek out better deals and to
try new approaches, but NEVER stop communicating with your target market. If
your competitors cut back their spending, rub your hands with glee and see it as
a golden opportunity to gain share at their expense. In a normal market,
marketing is often a game of ‘tit for tat’ that makes it hard to gain ground and
often results in standoff. In recessionary times, you can find yourself on an
empty dance floor with the audience’s eyes trained on you alone. Go for it!
Ideas and insights are free!
Whilst money may be tight, creativity comes free, as does spending time
understanding your customers’ needs. Time spent now hanging out with customers
and consumers, observing them, talking with them and listening to them will
yield rich insights about their needs and behavior that will give a huge edge to
your new product and service development efforts and help you hone your
History shows that it is twice as easy to grow share in a recession than in
buoyant economic periods. Those firms that succeed in growing market share in
this recession are likely to hang on to it, while those that lose it will have a
tough and very costly battle to regain ground when things pick up.
Clare Flynn is the Managing Director of ANT Consulting. ANT helps companies
grow their business by developing growth strategies and plans, generating and
implementing big ideas and unleashing the creative power of their employees. She
spent over 20 years in senior marketing roles in the UK and abroad for global
companies Procter & Gamble, Kimberly-Clark and United Biscuits as well as 2
years with ?WhatIf! The Innovation Company.