Feeling the pinch? Time to start fighting back

By Chris Haycock | 24 May 2022

How to use your small-business mindset and agility to your advantage, and counteract the recession.

Small businesses are naturally more agile than their bigger counterparts.

And that puts you at a distinct advantage when the recession bites this year… which really looks like it's on the cards.

Anything you can plan NOW to help people (ie consumers) save money will put you in a great position. Who knows, perhaps you can even come out smelling of roses, and grow your revenue by thinking strategically as we get closer towards the downturn.

I urge you to start planning now. The signs are there. Even lenders are starting to become hesitant, and are looking for even more security.

On the high streets and in homes across the country, we're beginning to see the same trend. Consumers are already cutting back on the little luxuries that we've already become accustomed to.

Non-essentials, such as Netflix, gym memberships, all-you-can-eat mobile data plans, weekend trips away, fancy dinners, and complementary therapy session are already being cut back, as consumers look for ways to save their hard-earned cash.

But we are humans, and there is going to be a lot of reluctance to knock these things we've taken for granted so long on the head. We don't like giving things up without a fight. People will seek out cheaper alternatives, even if they are classed as non-essential luxuries.

And therein lies your opportunity.

The big companies are going to struggle to offer reduced prices. They've got overheads, staff, expensive premises, fancy accountants, rock-solid existing contracts, and red tape to overcome, not to mention how long it takes to implement new strategies.

It's been said that a blue chip company changing course is like a super tanker. It takes a huge amount of time to pivot.

Not you. You're flexible. You've got agility on your side.

I don't know about you, but I see opportunities everywhere. I don't relish the thought of a recession, but if my business failed to seize any opportunities out there, then I'm doing no one a favour.

So, here's my recession-busting idea for you

Look at what your main competitor is offering, and do whatever you can to undercut their lowest price.

Then go to town promoting that offer.

Yes, it's going to mean making sacrifices to materials, support, manufacturing processes, delivery times, and perhaps even quality, but if it's the only chance to remain afloat then you've got to seize it, and claim it as a win.

Perhaps you may continue to offer your standard, high-quality product as normal for those with plenty of disposable income.

But, you can cream off some of your competitors' customers by offering an alternative product with a lower profit margin. That's far more favourable than watching consumers dropping out of the market completely because there are no alternatives.

That's great business… not just for you, but for consumers too.

As I said, humans don't like giving things up forcibly, and there's a good chance that many (not all) will at least consider lower-cost alternatives, even if they have to compromise on quality.

In normal times, I always advocate building more value into products, rather than dropping prices. But if people are unable to afford your prices, then no amount of "added value" will entice them to buy. Sometimes, you've got to accept that market forces are determining demand, and come up with a product that people can afford.

To demonstrate, let's take an example

A local, family-owned hair salon has the rival chain brand Toni & Guy down the road. They've never been able to compete for decades.

Until now, that is.

Local residents, seeing their disposable income dropping like a stone, are contemplating reducing the number of visits to Toni & Guy, because it's costly to get a haircut every couple of weeks.

That's when the smaller, family-owned salon comes running to the rescue, with an offer that people simply cannot resist. Their junior hairdressers (where your lower costs can be found) are offering haircuts for half the price of Toni & Guy. And they're just as good too.

So, locals can continue to enjoy a quality haircut, but only spend half the amount they'd normally pay at Toni & Guy. No sacrifices needed.

Sure, the idea is simplistic. Loyalty is a big factor in the health & beauty industry. But when there is no alternative, the odds are now stacked heavily in your favour.

The strategy needs some careful thought of course, to make sure that a) you are still making a profit, and b) you don't compromise too much on quality and service, which will risk your brand reputation.

Find the savings

To discover where you can make savings, look at every part of your business processes to see what you can shave off. Dig deep, and you'll discover plenty of areas where you can reduce fixed costs without compromising your profit margins.

During Covid lockdown, my own business was almost decimated. I lost 80% of my revenue, but did not qualify for any government help. 😭

I felt abandoned, but by finding savings here and there, I managed to get through it. In total, I managed to find savings of almost £500 a month, without compromising my services. Today, those savings are still in place which is a nice bonus.

There's no reason why the hair salon can't find significant savings too, so that they can offer lower-cost solutions for people feeling the pinch.

Once they created their low-cost solution, it would be simple for the salon to promote it with a local campaign (flyers cost very little). And it doesn't need to be permanent either.

Something like this…

Feeling the pinch? You don't need to stop getting your hair done every couple of weeks. Get your hair done for half the price of Toni & Guy with one of our fully-trained junior stylists. Our recession-busting offer is running until Christmas 2022. Book now to secure your appointment.

The “offer” needs to be just about enough so people can continue to enjoy their little luxuries, whilst still being able to cut back on their expenses. Remember, it also needs to generate enough revenue for you to see you through some tough times.

Nail down this strategy now, and you can breeze through a recession.

After all, it won't last forever.

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