How to make your business recession-proof before it’s too lateBy Solange Messier
There is plenty of disagreement among economists, financial analysts, and business leaders about whether or not we are officially in a recession and just how dire the future looks. However, there's no denying that the economy has hit a rough patch. Coupled with rising prices for all kinds of goods and services, everyone is feeling the crunch and reevaluating their budgets. If you run a marketing agency or resell digital marketing services, all of this may leave you wondering how to make your business recession-proof.
Read "How to survive a recession: The agency playbook" and gain the actionable strategies, tactics, and checklist your agency needs to adapt in tough economic times.
Luckily, there are strategies you can implement today to give your business an edge throughout the looming recession and beyond.
As concerning as the future may be, you don’t have to dramatically restructure your business or change how you operate in order to set yourself up for success throughout the recession. Instead, we’ll go over actionable, practical changes you can start making right away that will give you and your team confidence that you can navigate an economic downturn and still grow your business.
Which industries are recession-proof?
Those in the digital marketing space have the benefit of being able to work with a vast variety of clients. Fortunately, all kinds of businesses across every industry require marketing services to succeed. To make your business recession-proof, it helps to think in terms of which clients operate in recession-proof industries, and to target more work with those clients.
If your clients are likely to thrive during a recession, your agency can similarly count on continued work despite an economic slump.
So, what are the industries that tend to do well through recessions? Here are the ones that have proven resilient in the past:
- Health services
- Financial services
- Legal services
- Funeral services
- Social work
In addition to these reliably recession-proof industries, there can be some other surprising winners. The Lipstick Index, made famous in 1998 by Juliet Schor in her book The Overspent American, posits that during times of economic anxiety, small discretionary luxuries that won't break the bank, such as lipstick, sell very well. They provide an uplifting luxurious experience without the price tag of costlier luxuries, such as expensive facial treatments. Interestingly, lipstick sales grew nearly 50% in the first quarter of this year over the same period last year.
What does this mean for you as a marketing agency owner or someone reselling digital marketing services? Keep an eye out for recession-resilient clients who may not be getting as much attention from competitors, such as those selling popular, affordable small luxuries.
Top strategies for how to make your business recession-proof
The best things you can do to recession-proof your business are:
- Fill your client list and pipeline with clients operating in recession-proof industries
- Create pricing packages and options that invite people to continue working with you even if their financial situation changes
- Control your costs by reselling services and products
Let’s dive into each of these.
Working with recession-proof clients
If you read the above list and are concerned that you don’t currently serve clients in any of these industries, now is a good time to look for opportunities to add recession-proof clients to your roster. It’s one of the best ways for how to make your business recession-proof.
It ensures that even if some of your clients start scaling back their budgets or even dropping off altogether, you will have a reliable income stream from new clients that will require your services despite the economic situation.
Creating favorable packages
While you may be fortunate in adding new recession-proof clients that can keep your business going throughout a recession, it doesn’t mean you should neglect your existing clients or prospects even if their budgets are impacted. After all, they are the ones who have helped you build your business to this point.
A recession is an opportunity to strengthen your existing business relationships and demonstrate that you are there for your clients when it really matters.
One way to do this is by offering different pricing tiers or product and service bundles to cater to a variety of budgets. If a client has to cut back their monthly spend, work with them to identify ways you can continue delivering value at their lower budget, in a way that is still fair for you.
Control your costs
During a recession, it’s imperative that you avoid digging yourself into a financial hole in which your costs exceed your revenue. One way to do this is by becoming a white-label reseller.
Delivering services with an in-house team means that you’re on the hook for hiring, onboarding, and salaries, whether or not you’re getting enough client work to justify these costs. It also means your growth is capped at what your in-house team can reasonably manage before you have to start spending more to bring in more talent.
When you resell white-label products and services, you can focus most of your efforts on sales and have a white-label team fulfull under your brand name. You only pay for these services when you secure a sale, so you never have to worry about being in the red. If work slows down, you’re not still left paying salaries. If work picks up, you can easily and seamlessly scale up.
What to do in a recession to make money
To make your business recession-proof and survive a recession, it goes without saying that you need to bring in money. Two strategies to keep in mind, in addition to what we’ve discussed so far, are diversifying your client base and diversifying your product offerings.
Diversifying your client base
Avoid the common pitfall of getting too comfortable just because you’ve found a few recession-proof clients to work with. Circumstances can always change, so maintain a steady pipeline of prospective clients. This is always true, but it is especially true in a recession when the economic outlook of any business is less certain.
Diversifying your product offerings
The greater the variety of products you can offer, the more of a one-stop shop you can become for your clients. This makes you a more valuable partner and reduces the chances of them moving on to work with competitors. If you offer fantastic services and can meet many of their digital marketing needs, your relationship with each client will be far stickier and you’ll be better able to attract new clients.
Recession-proof opportunities for agencies
As challenging as recessions can be, your value as a marketing agency is in some ways even greater now.
Because many businesses make the mistake of reducing their marketing and advertising spend during economic downturns, only to dramatically lose market share to competitors that confidently continue their marketing efforts. Past recessions have proven this time and time again. Part of your job as an agency is to communicate this effectively to clients: this is not the time to cut back their marketing efforts. Rather, it’s a time to refine those efforts and take advantage of the rare opportunity to grab a larger chunk of their market.
How to make your business recession-proof: Learn what to sell in a recession
Knowing that continuing marketing efforts is important for businesses that wish to succeed through a recession, it’s a good time to double down on the key essential components of any effective marketing strategy. Selling these can help you find ways for how to make your business recession-proof. Clients may not be investing in big rebranding projects at the moment, but they can benefit from the following services:
- Traditional and local SEO services
- PPC advertising
- Email marketing
Navigating a recession may require a bit of forethought and preparation, but you can learn how to make your business recession-proof by following these strategies. With them, you can set your agency up to thrive during any economic downturn.