For business owners this can be a very stressful scenario, especially since many are still struggling to adapt to the new remote work model brought forward by the Coronavirus.
Though the future may seem bleak, now is not the time to abandon ship. Instead, you should adjust your sails and ride the changing winds to victory!
In this post we'll show you how your business can not only survive, but thrive and even scale during the coming recession.
Recession surival step 1: Successfully transition into a remote workforce model
The first thing you'll need to focus on is setting up a strong foundation for your businesses future by successfully transitioning into a remote workforce model. This innovative setup was always an inevitability, but it's now being aggressively brought forward by the Coronavirus outbreak.
Transitioning into a remote workforce model
There are four objectives you need to meet to ensure your business operates efficiently in a remote model.
Care for the mental health of your staff
Maintain efficient communication
Keep all of your data secure
Maintain high levels of productivity
Let's break each point down.
Caring for the mental health of your remote staff
The coronavirus outbreak is stressful for both employees and employers. With so much uncertainty and such a dramatic workplace model shift, your staff will surely be worried about the security of their job which can be very damaging to mental health.
Here are some way you can take care of the mental health of your staff:
Make your staff feel safe
It's your job as a leader to make your employees feel safe and protected at all times, this will naturally result in high productivity levels in a remote setup. The best way to make your staff feel safe is to keep them informed.
Send regular email updates about any company changes. Make your plans for the company crystal clear and indicate your progression through those plans. Above all, do not incite anxiety. This is your opportunity to shine as a fearless leader in complete control of the business and the livelihood of your staff.
Virtual coffee break with employees
Working remotely can get really lonely, especially for the social butterflies in the office.
Encourage your staff to have virtual coffee breaks together via Google Hangouts. You don't have to limit video interaction to coffee breaks, you can have staff members that normally sit together always connected via video chat. This will also ensure your usual internal communications remain sharp and efficient.
Ensure your remote staff separate their workspace from their relaxation space
It can be difficult for remote staff to mentally detach from their work when they finish if their environment doesn't change. Encourage your staff to set up their workstation in a dedicated study room and to dress in their usual work attire. That way they can feel like they've mentally checked out of work when they change back into their home clothes.
Remote staff should follow their daily routine
Routine is very important especially during unsettling situations. It sends the subconscious message that life keeps moving forward. Encourage your staff to wake up during their usual time and to follow their regular work routine by starting and finishing at the same time.
Take regular breaks
Because remote staff don't need to travel to work their daily activity will drastically reduce. Exercise is very important for mental health so encourage your staff to take regular stretching breaks. Maybe organize a daily stretching routine for all staff via a video conference. Such company-wide interactions keeps everyone's morale high and the company culture thriving.
Maintaining efficient communication with remote staff
The breakdown of communication is a sure way to cripple a business. Besides staying connected with staff via Google Hangouts , or Slack , your staff should also have the ability to collaborate seamlessly on group projects.
With the mental health of your staff cared for, your workers should reciprocate your empathy with highly productive work. You can further cultivate productivity by implementing an employee time tracking solution such as Time Doctor.
Time Doctor keeps track of staff activity to quantify their productivity levels as a percentage. The software calculates this based on the type of websites and apps being accessed and the level of keyboard and mouse activity.
Implementing this solution shouldn't make your staff feel micromanaged, it should instead encourage them to stay focused on their work and not distracted by their home environment.
You'll also have the peace of mind of knowing when each of your workers have clocked in and out of work.
Recession surival step 2: Reduce cash flow
With your staff now working completely remotely your cash flow should start to decline.
If you have the ability to end your lease agreement you'll remove the burden of rental costs along with all the other overheads associated with managing an office (such as catered meals, electricity costs, office parties etc).
Your staff will also greatly benefit from a reduction in spending, by not having to spend money on travel.
Americans spend between $2000 and $5000 every year commuting to work. That money can be better spent on essential items, or loan repayments to relieve the burden of personal debt faster during a recession.
Switching to a remote model during a recessive season is, therefore, the best thing you can do for both your business and your staff.
Here are some other ways you can reduce cash flow:
Delay bill payments as long as possible
Before applying this tactic, you should measure up the benefits against any discounts offered for early payments.
By investing your bill payments into a high interest account, the accumulated interest could amount to a nice discount. The benefit is greatest for high priced bills.
For example, if you had a $20,000 bill that was delayed for 8 weeks, and that amount was invested in a 5% interest earning account, you could reduce your bill by almost $170.
Of course, always delaying bill repayments Is not a long term solution. You should strive to minimize all of your bills by eradicating all unnecessary purchases.
Below are some bill reduction options most businesses can benefit from.
Switch to a cheaper email marketing solution
Email marketing can get very expensive especially if you have a lot of subscribers.
For example, if you have 100,000 subscribers to your newsletter and you were signed up with Mailchimp, you'd be paying about $700 per month. Source: Mailchimp
But that doesn't mean you should abandon this channel. You can't afford to lose contact with your customers during a recession and email is one of the most valuable forms of marketing with an average ROI of $42 for every dollar spent .
Instead, you should switch to a cheaper email marketing solution. One of the cheapest email marketing solutions available is Amazon Simple Email Service .
And that's not $10 every month, that's $10 whenever you send an email campaign to 100,000 people, so you only pay for what you need when you need it.
Compared with $700 per month that's not a bad discount.
To use Amazon SES you'll need to install the software Sendy. Sendy has a one time fee of $59 and it has all the functionality of conventional email marketing software, such as list segmentation, auto responders etc.
The only caveat is that you need some technical expertise to install the software onto your host server.
If your web host has control panel access, you can follow the instructions in this video to install the software.
If this setup process makes you a little anxious, you can hire a freelancer to get Sendy set up for you.
Switch to a cheaper accounting software and bank transfer payments.
Most accounting software is quite costly because they come with powerful features that reduce administration, like bank reconciliations, asset management, dashboards etc.
While these features may be pinnacle to the efficient operations of large businesses, small businesses should question the necessity of these luxuries during a recession.
Wave is a free accounting solution that can save small businesses a tonne of money. Its free features include all of the necessary day to day accounting activities such as invoicing and even receipt scanning via the mobile app.
You'll only ever need to upgrade to the paid plan if you want to accept payments through the platform, but during a recession you should strive to maximize your profit margins by avoiding third party fees as much as possible. The way to do this is to only offer one method of accepting payment, via bank transfer. You can include your bank details in your invoices.
Keeping track of all received payments can get a little tricky so make sure you ask your clients to include a clear identifier in their transfer description.
Get paid faster
One of the best methods of reducing cash flow is ensuring you get paid faster. The easiest way to achieve this is by simply invoicing your clients faster and requesting payment prior to commencing any work. This is also a great way of filtering our clients with a poor credit history.
If you're concerned about a client's ability to pay for your service, you could perform a credit check prior to any formal business agreement.
To incentivize swift payments consider offering a discount if payments are made within a certain timeframe. Just make sure the discount does not bruise your profit margins.
Avoid credit payments
A recession is not an ideal period to run your operations on customer credit. Credit will not pay the bills. So avoid liberal incentives such as free consultations or buy-one-get-one-free offers. If you're confident in the immediate value you can offer your clients, you don't need to resort to such offers.
The temporary demise of China's manufacturing lifeblood amid the coronavirus has had a devastating ripple effect on the global economy. This is encouraging many businesses to consider reshoring their supply chain .
Not only will this protect you from future manufacturing disturbances, but the short lead time will allow you to further reduce cash flow by keeping your inventory levels low.
Your existing customer base is likely to be your primary source of income for quite some time during a recession so you need to strengthen their relationship. Reach out to them to let them know that you are here to help them through this financial crisis.
Instead of just emailing them your support, consider going the extra mile by calling them. Ask them how they are coping and what you could do to help them in these changed conditions. You may need to tailor a unique solution for each customer to accommodate for their financial situation. This is well worth the effort because it will result in a life long business relationship and countless referrals.
Can startups survive the recession?
Launching a startup during a recession may not seem like a wise initiative. With everyone cutting costs, what are the chances of your startup getting funded ?
The good news is that during a recession VCs are still open for business , especially for tech startups. During a financial crisis tech trends do not decrease, they increase. And if you can demonstrate to investors that you will minimize overheads by staffing your startup with freelancers rather than employees, they'll be very likely to invest in your tech venture.
Thriving during a recession
By following all of the above guidelines, your business will have the highest chances of surviving a recession. But this is just the minimal requirement, the goal is to, not just survive but thrive during a recession.
Once you feel comfortable with your survival abilities, take the following steps to start thriving.
Update your customer testimonials
You need to demonstrate to prospective customers your ability to help them in this new economic climate. Always position your solution as the most relevant at any given time.
If you have successfully strengthened your relationships with current clients they'll be more than happy to help. Video testimonials have the greatest impact and they don't need to be of the highest quality, a simple video recorded on a phone will reflect the sincerity of your customer testimonials.
Once your clients send through their testimonials, publish them on your home page for maximum visibility. You can even write up case studies for each testimonial and publish them as blogs posts you can then promote on social media .
Steal your competitors' customers
Not all businesses will heed the warning signs and prepare for the recession. Those that refuse to adapt to the shifting economic landscape will certainly fall through its cracks. This might even include your most formidable competitors.
Make a list of your top 10 competitors and keep an eye out for any negative social media comments on their posts and negative Google reviews. When you spot one, reach out to that person and offer them your services instead. Outline why you are more capable of helping them through this financial storm. You can even refer them to your updated reviews to seal the deal.
Buy out your competitors
An increasing downward spiral of negative reviews is clear evidence that your competitors will not survive the recession and they're likely to be very open to a buyout offer. If you're in a financial position to do so, buy them out.
Then, once you've stabilized yourself under the increased workload by following the survival protocol above, be on the lookout for new competitors to buy out and complete the cycle again.
If your competitors are publicly listed, their stock prices will be indicative of their health status and possible willingness to sell.
Who knows, when the dust finally settles, you might end up as the new leader of your industry.
Invest in stock
A recession is a unique opportunity to buy reduced price stock of high profile businesses. Then, when the market eventually recovers, you can sell the stock and make an incredible profit.
Segregate a certain amount of money for investments and slowly build up your high profile portfolio.
Keep in mind that only certain business structures are capable of investing in stock such as S-corporation and Incorporated companies. It's best to consult with a lawyer before commencing any investment activities.
Scaling during a recession
With your business fully acclimatized to the recessive market and thriving, you need to have a plan for scaling your operations while maintaining your low overhead habits, especially if you'll be buying out your competitors.
Scaling a remote workplace via conventional hiring methods is a nightmare, it takes far too long and it is much too expensive.
With your business now fully adapted to the remote model, you need a scaling solution specifically designed for the remote workplace. You need to scale with freelancers.
Let's compare the numbers for hiring freelancer staff.
A freelancer can be hired within a day, and they're much cheaper because you don't need to pay for any benefits and you're not obligated to keep them on board all year. Simply hire freelancers on a project by project basis to fill the talents gaps you need when you need them.
The table below compares the cost of different hiring solutions for a mobile app developer:
Hiring an agency
An agency houses a team of developers that will create your app for you. According to Clutch, the average cost range for agency app development is $30,000–$700,000 USD.
Hiring in house
The average salary for app developers, per PayScale, is $68,478 USD every year. This option is only worthwhile if you'll be requiring ongoing services from your app developer beyond the singular project.
Hiring a freelancer
On the Freelancer platform , you can hire skilled mobile app developers from around the world at the fraction of the cost of other hiring solutions. The median cost for completing a mobile app development project with a freelancer is $543 USD.
Core solution operations
Users (or customers)
Everything directly related to business operations such as financials, analysis, growth strategy, negotiations,partnerships etc.
Everything directly related to the core solution, such as software development, product development, R&D etc
Everything directly related to your users or customers. This includes customer service, user experience, sales, troubleshooting, etc.
Once you've established freelancer staff in each of these apexes, you can continue scaling by hiring roles along the edges of this triangle to connect all of the different departments together.
For example, hiring staff along the Solution-User edge will connect your Solution department with your User department and strengthen the communication stream between the two.
Roles within this category could include:
Then it's just a matter of strategically building up the remaining edges until you have a complete triangle representing your fully established freelancer workforce.
To help you remain in control of your scaling operations and avoid premature scaling , you can work alongside a Technical Co-pilot. A Technical Co-Pilot can source, establish and even scale your freelancer workforce for you, giving you the freedom to solely focus on business strategy rather than staff management.
The coronavirus outbreak is changing the working landscape permanently. Businesses need to adapt to these changes quickly and efficiently. This is the key to, not only surviving, but thriving and even scaling in the middle of a global paradigm shift.