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Small business basics

8 strategies for recession proofing your professional service business

Whether you believe we’re entering a recession or think the economy will chug along somewhat unscathed, we can all agree that these are uncertain economic times. In times of uncertainty, it’s often better to be proactive than reactive, so your business is set up to thrive no matter the economic outlook. This article will show you how.

8 strategies for recession proofing your professional service business

According to a survey done by CNBC and SurveyMonkey, 81% of small businesses expect the U.S. economy to go into recession this year. And while this recession will likely look different than the downturn in 2020 or the great recession of the late 2000s, it’s fair to say with inflation and increased interest rates spending habits will change. According to the Washington Post, some economists are banking on pent-up demand for things like travel and housing to maintain economic momentum until the end of the year. But, there are a growing number of analysts, like Moody’s Analytics chief economist Mark Zandi, who warn of economic downturns within the next 12 months and an economic recession within the next two years. 

The good news? Even during an economic storm, there are recession proof businesses that survive and can even thrive. In particular, those in professional service industries can often weather recessions quite well, earning the reputation of being recession proof. But that doesn’t mean even the most recession proof industries won’t feel the pinch. Many companies in the professional services space will face clients who, in an attempt to cut costs, may try to tackle things themselves or put initiatives on pause. Instead of hiring accounting firms they’ll do their own taxes and bookkeeping. Instead of getting help with financial planning from trained financial advisors, they’ll manage their own investments. Rather than beginning a house hunt, they’ll put moving on hold to save money.

So, how might you navigate this potential economic slump and survive to truly become a recession proof business? Here are 8 ideas to recession proof your business so you can succeed in any economic situation. 

What makes a business recession proof? 

To understand how to make your business recession proof, let’s first look at what it means to be a recession proof business. To start, recession proof businesses typically provide either essential, in-demand, or specialty products or services. Those who provide utility services, like energy for our homes, healthcare services, and transportation services would fall into the essential services category. In-demand products and services are ones that become sought after in response to the economic climate, such as when food delivery services became highly in-demand during the pandemic. Specialty products have unique characteristics that consumers are willing to make a special purchasing effort, such as photography equipment.  

Recession proof businesses maintain healthy margins on their products and services. Cash flow management is also a key proponent of recession proof businesses as it arms a business against difficult financial times. Lastly, offering clients superb quality and value for cost are important characteristics of recession proof businesses. While their competitors are scaling back and maybe reducing what is included in their services to clients, recession proof companies double down on client experiences to ensure they maintain customer retention. 

But even if your business doesn’t fall into one of these categories, there are things you and your team can do to position your services as essential and drive demand in preparation for tough economic times and potential financial struggles. Let’s look at some recession proof business ideas you can  start implementing to help keep your cash flow, and small business, stable. 

1. Encourage referrals

Your existing network of clients is a huge, untapped resource for maintaining revenue growth. In fact, people are 4X more likely to purchase a product or service based on a recommendation from a colleague or friend than from researching on their own. If you are anticipating difficult times in the coming year, now is the time to start asking your happy and loyal clients for recommendations. If you’re reluctant to ask for a referral, here are a few ways to encourage organic recommendations from your client base:

Stay top-of-mind with clients between projects

Even if a project with your client has come to a close for the year, stay top-of-mind with regular communication. Deploying things like monthly email newsletters and writing and sharing value added content can reaffirm your status as a subject matter expert. They also provide a reason to conduct periodic reviews and check-ins with your clients. 

Ask for reviews 

Another business idea is to overtly encourage your existing customers to tell others about your services. This is a go-to tactic in many sectors like the food and beverage industry, delivery companies, and cleaning services. Tell your happy clients to post reviews on public sites like Google, Yahoo, or Yelp. If they need a nudge, consider offering an incentive for their time and effort to provide a review. 

Continuously exceed your clients’ expectations   

Unfortunately, people are more inclined to share negative experiences than positive ones. The bar for wowing clients is high, so in order to get them to share their positive experiences you need to really over service them. Beyond keeping them informed and sharing content, look for additional ways to add value. This could include offering free consultations,, sending ‘thank you’ notes or gifts, or creating custom reports and bundles. 

2. Establish a more robust online presence

Research and purchasing online is happening at an increasing rate. This means your online presence is a key factor to attract new business. Like a beautiful store front, a strong website conveys your credibility, consistency, and what differentiates you from the competition. Here are some website optimization to-do’s to help make you recession resistant: 

Optimize for speed

If visitors are leaving your website before it fully loads, your pages need to be lighter for them to load faster. The first five seconds of page-load time have the highest impact on conversion rates. Website conversion rates drop 4.42% with each additional second of load time.

Make it mobile friendly 

Take note of how visitors are accessing your site. People tend  to access websites through their smartphones. In fact, up to 70% of web traffic comes from mobile devices. With more people researching services on their smartphones, you may need to optimize your website for mobile responsiveness. 

Equip your site with tools for easier conversion

Your website should educate potential clients about your service offerings and make it easy for them to get in touch. Leverage online banners and intake forms, so that website visitors can be easily converted into new leads. 

Invest in online marketing to drive more site traffic

If you’re unfamiliar with online marketing, it can sound daunting, but once you’re introduced to the concept and tools, such as Google Ads, you’ll be amazed at how much they can help drum up more traffic to your site. Here’s a Google Ads getting started guide you might find helpful.

3. Review and consolidate expenditures

No matter your business size, every dollar counts. So, before the economic times get any tougher, look for the inefficiencies in your business spending. This process might take some time, but improving your cash flow management will be time well spent if you can consolidate expenditures in preparation for an economic downturn. Audit your subscriptions budget and relook at the products and services you’re using based on the following:  

Capabilities 

Software providers regularly enhance their capabilities, so it’s good to check in and see what features have been added. See if there’s opportunity to consolidate and cancel duplicate services to create cost (and time) savings.

Usage

Make a list of the applications and services that your team subscribes to and have everyone rank the importance of each one. You’ll see a pattern of which ones are critical, and which were possibly purchased with the best intentions but aren’t being used. Independently verify usage by tracking logins on applications and sites to see if your team is using them as much as they think they are.

Contract Renegotiation 

Have someone on your team go through your business’s services to see if there’s opportunity for contract renegotiation. Depending on the services you use, there could also be cost saving opportunities such as switching to an annual plan versus a month-to-month subscription, downgrading packages, or reducing seat counts. It never hurts to ask.

4. Amplify your work on social media  

Beyond expanding your online footprint in the more traditional ways, using social networks can be hugely advantageous for creating recession proof businesses. Social media is not just an entertainment tool for young people. Whether you’re providing accounting services or childcare services, social media platforms can expand your reach and help you stay connected with clients. If you’re overwhelmed at the idea of using social media and don’t know what channel is best for you, just pick one or two to focus on. The platforms you choose should match where your potential clients spend time, so don’t be afraid to ask current clients their social media preferences.  

A pretty safe place to start is LinkedIn. It’s the most professional social media platform, and likely the one most people will use to verify your credentials and experience. If you haven’t already, create a business page and either add your clients as direct connections or ask for them to follow your page. Take time each month to share thought leadership pieces about your industry that will provide helpful insights to your network. Once your network starts engaging with your content, your posts will get a larger audience reach. When you’re comfortable with your presence on LinkedIn, turn to other channels like Facebook, Twitter, Instagram, and maybe even TikTok.

Interested in learning more about why you should invest In social media marketing? Check out this Forbes article

5. Invest in customer retention (even when there isn’t threat of economic crisis!)

So many businesses focus on gaining new customers, but research shows increasing customer retention rates by 5% has exponential returns – boosting profits by 25% to 95%. There are lots of customer retention strategies you can dig into, but to start, remember the human component of your business. Top recession proof businesses are the ones that use slower times to strengthen client relationships. Unlike product-centric businesses devoid of human interaction, professional service businesses have a unique advantage – because your expertise and experience are the product. The relationship between you and your clients is what will ensure their longterm loyalty and is a stronger bond then attachment to an inanimate product.

You can capitalize on the strength of your relationships and boost loyalty by turning to technology. If you don’t have a customer relationship management tool (CRM) or contact manager currently, consider getting one. These tools can help you monitor client engagement and ensure each client’s history and unique needs are well documented. That way anyone at your company has context about their account and the information to provide world-class service. You can also use your CRM to create scoring systems for evaluating the level of loyalty or churn risk of every client. This helps you spot at risk accounts early and lets you tailor interactions with clients based on where they are in the journey with your company. Regardless of your services, whether you’re a pet care business or cleaning business, consider offering long-term or at-risk clients preferred pricing to ensure they stick around even during economic uncertainty. 

6. Automate and delegate business operations so you have more time to focus on strategy

Small business owners often have to juggle so many roles that it can result in more time working in the business than on the business. Take a step back and see if there are ways you can delegate tasks and automate processes, so you can focus on what matters most – whether that’s building relationships, finding new leads, or getting those referrals. 

To start, bucket delegation into two categories: people and technology. Understand which jobs require a human touch and then look at the strengths of your team members. Which functions can be delegated for them to take on? In what areas are team members showing natural interest and aptitude? Dividing responsibility amongst your team is a great way to reduce your own workload while providing growth opportunities for those on your team who are interested.

If you don’t have a team, consider what can be outsourced to other experts. Audit your day to understand where you’re spending time and any jobs you’re doing that aren’t core to growing your business. Maybe it’s updating your website, managing your accounting, or buying online ads. If there are experts who can help with this, and you can afford to hire someone, don’t be afraid to invest in outside support.

Then there are those routine, operational tasks that take up your time but could easily be automated. Think mundane activities like data entry, invoicing, sending email reminders, or appointment scheduling. This is where technology can help. Consider software to help support automation of these tasks. Programs like Zapier, B12, Quickbooks, and others are designed to take repetitive work off your plate so you can stay on top of the administrative aspects of your business, without wasting time doing them yourself. While it may seem counterintuitive to spend money on technology during times of economic recession, investing in tools to help automate menial tasks can be well worth the spend. 

7. Know your financial assistance options

When a potential recession is on the horizon, it’s time to investigate your options for financial assistance. This is one area of business ownership that’s best to think about ahead of time. Hopefully you’re experiencing favorable business results and your business hasn’t been affected by the economy slowing; however, if there comes a point where your business needs a financial boost, you won’t want to be scrambling to find funds while also trying to keep things running. 

The tricky thing with financial assistance is that it is easier to access when you don’t need it, and tougher to access when you need it most. So, even if you don’t need a loan or line of credit now, getting approved for one might set you up with a safety net just in case you need it.

If you’re not ready to secure financial support right now, even just researching your options can be helpful. Here are some resources you can start to read through and bookmark in your browser: 

  • The Small Business Administration (SBA) is a federal-level agency dedicated to providing companies with loans and lines of credit, as well as counseling and contracting expertise. There are great small business resources on their website, including a page dedicated to helping you find a loan
  • Applying for a small business grant is another option for financial assistance in the chance that an economic downturn is in the near future. For a comprehensive database of grants administered by various government agencies, check out Grants.gov. In their “Grants Learning Center” you can learn about grant eligibility and active grant programs.

8. Explore partnerships

Become a recession resistant business by leveraging the power of partnerships. One of the key benefits of business partnerships is the sharing of audiences, which can help both businesses increase new leads. 

Partnerships can be used in almost any business because there are always complementary products and services to the one you provide. Put yourself in the mind of one of your clients and think of companion services to yours that could make your clients’ experiences even better. If you are a realtor, your client is going to need a real estate lawyer, a mortgage broker, a moving company, and more. If you are an architect, your clients might be looking into interior designers or decorators. 

Recession proof businesses are made even stronger by finding  opportunities to partner with other companies. By working together to serve clients, you’re saving them  time from having to look for reliable services themselves, and your business is getting exposed to a whole range of other potential clients you would have had to work much harder to acquire on your own. As the saying goes – if you want to go fast, go alone, but if you want to go far, go together. 

Recession proof businesses are the prepared businesses

There is no doubt, economic uncertainty can be scary for everyone, but it doesn’t have to be crippling. Being proactive and setting up strategies to better weather a potential economic downturn can give you peace of mind and can help you learn new ways of managing and expanding your business when the economy recovers. And while these ideas won’t eradicate the stress of managing and sustaining a business during periods of significant decline, they can help you maintain control and ensure you’re better positioned to weather whatever changes are coming.

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