Six ways to grow your business during challenging economic times

With the current economic uncertainty, Shaun Barton of Company Closure highlights six ways you can grow your company.

How to grow your business during challenging economic times

The past few years have been anything but smooth sailing for the economy, and in turn, companies up and down the country.

An uncertain economic climate goes hand-in-hand with declining consumer confidence. Purse strings are tightened, and customers are more likely to delay significant purchases until the outlook becomes clearer. While this may make sense on an individual level, this behaviour can have a devastating impact on businesses, particularly those that cater to the discretionary market.

During this uncertainty, it’s important to remember that where there is a challenge, there is also an opportunity. Here are six ways businesses can embrace these challenges and gain a competitive edge:

Understand your finances

Take stock of your assets and liabilities and draw up a picture of your current financial position. This will allow you to see how much flex you have in your budget, identify any immediate or upcoming cash flow worries, and inform your plan for the future.

When finances are tight, this is likely to result in you looking to cut costs in areas where inefficiencies are obvious. However, you still need to invest in your business if you want it to survive. For example, reducing the quality of your products could result in an initial profit boost, however this could well have a detrimental impact on customer retention or brand reputation over the long-term, costing the business much more in terms of lost sales.

Invest in marketing

When looking at cutting costs, one area which you may be wise to consider investing in is your marketing efforts. Marketing is more important than ever during periods of market volatility. Where customer initiative for embarking on a purchase – particularly one which is non-essential or ‘luxury’– is reduced, getting yourself in front of your potential customers is vital.

Be smart with your spending; ensure your marketing efforts are segmented and focussed on those businesses or individuals more likely to be interesting in your offerings rather than a blanket campaign which could see your time and efforts wasted.

Focus on customer retention

It’s significantly cheaper to retain an existing customer than it is to acquire a new one. Not only this but many barriers are instantly removed when dealing with a previously loyal customer; you already know they are interested in your product or service offering and trust has already been established during your prior interactions. Declining consumer confidence means customers are generally less likely to want to take a chance on unfamiliar brands, preferring instead to stick to those they know and trust. Use this to your advantage.

Personalised offers or discounts can be an effective way of tempting customers back, generating an initial sale for you, while reminding the customer of your brand and what you have to offer. A continuing loyalty campaign involving regular newsletters, promotions, or even a rewards programme can help you keep at the forefront of your customers mind when they are in the midst of a purchasing decision.

Look for emerging gaps

While a changing marketplace and shifting consumer expectations may well mean demand cools for certain products or services, conversely there is likely to be increasing demand for other areas which may not currently be sufficiently serviced by others.

For example, at the start of the pandemic in 2020 businesses up and down the country were forced to close their doors to the public leaving many unable to trade in their usual manner. Those that were agile enough to pivot their offerings to better accommodate the changing landscape, for example, remote offerings rather than face to face, or at home delivery instead of an in-store or restaurant experience, were able to continue trading during those times. Diversifying helps to create multiple revenue streams, which in turn boost your chances of remaining in a profitable position even if demand in certain areas plummets.

Streamline your operations

Identifying non-performing areas of the business or products or services can better allow you to focus money, resources, and energy into those operations which reliably generate the most income:

For companies with a high street presence this may mean divesting the business of non-performing stores.
For smaller companies this may involve going forward with a reduced menu to mitigate costly wastage of less popular ingredients.

Know your customer

Quite simply, the better you know your customer, the better you can tailor your offerings to meet their needs. Start by asking yourself a series of questions:

What are their pressure points?
What are their values?
What problem is your product or service looking to solve?
How could their needs or priorities have changed during these economically trying times?
And how can you best serve them in light of this?

Use this knowledge to inform your ongoing marketing efforts, service offering, and pricing strategy.

Summary

Unfortunately it’s unavoidable that during economic uncertainty some businesses will succumb to the pressures and will be left with no option but to close the company for good. However, this is far from inevitable. There is always room for innovative businesses willing to step into the gaps created by an ever-changing marketplace. While the current trading environment may be trying, remember it is possible to survive – and even thrive – during these times.

About the author

Shaun Barton is a partner at Company Closure and boasts a wealth of experience in helping directors of distressed companies understand their options. A director-facing adviser, Shaun is often the first point of contact for business owners who are looking to close a limited company.

Images

Getty Images

Publication date

27 November 2023

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.