2008 was the worst recession I had ever seen in Arizona.
And of course, I started my garage door business months prior.
Already in debt, we did everything we could to survive -- from running jobs to fixing trucks to managing angry customers -- and thank God we pulled it through!
So, with a recession looming, you really need to understand what you're getting yourself into.
What are your odds? How can you actually win and gain market share over your competitors?
Well, let me share with you a study I came across recently. When I read it, it blew my mind...
It came from the Kauffman Foundation, and here's what they discovered in their research:
"...more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market, along with nearly half of the firms on the 2008 Inc. list of America's fastest-growing companies."
Was that a fluke? Nope. They also analyzed companies that were founded three decades ago:
"In 1985, for the 372 [Inc. 500] companies that reported a founding date, 26 percent were founded during a recession, and 41 percent during a bear market. Thus, two-thirds of the companies began during a recession or bear market. In 2008, each of the top 500 companies reported a founding date -- only 17 percent were founded during a recession, while 31 percent began amid a bear market."
In other words, the odds aren't as horrible as you think. The question is, how do you make it work?
1. Ignore the naysayers (including the one in your head).
Over the years, I've heard it all: "It's tax season. Christmas is coming. The depression is here. We're going into a recession." There are also a lot of people out there that say, "I can't make money in my market."
Look, I'm not saying that they are all wrong. But I've made money in a recession. I've made money during COVID-19. I've made money in good and bad economies.
Accept the challenges, but don't let the naysayers -- especially your inner critic -- stop you from working hard on your business.
2. When times get tough, the tough get marketing.
Marketing is what brings customers to your business. You need to keep marketing and selling no matter what. Yet, I've seen entrepreneurs slashing their marketing spend in bad times -- that's like shooting yourself in the foot just when you start to bleed! In fact, if you can out-market your competitors while they suffer and cut costs, you will likely gain a bigger slice of the pie.
If your marketing is too expensive, switch to a cheaper channel or strategy. There are also tons of free options out there, whether it's social media or SEO.
In the 2008 recession, one of my favorite channels was Craigslist. Some people might hate Craiglist but I definitely got my share of good leads over there.
To pick the right marketing platform, find out where your customers are hanging out online, and market to them directly. This is the case offline too.
3. Find "recession-proof" customers.
In No B.S. Marketing To The Affluent, Dan Kennedy explains how he goes to yacht clubs and private airports and advertises to affluent people, where the average ticket is 100 times higher.
How is Kennedy's strategy relevant to you? In recessions, your best customer is someone who can afford your products or services. I recommend seeking out the well-to-do where the ticket is 100x higher.
Now, if you're reading this and thinking, "well, none of my customers have private jets," that's not the point. The point is, that different customers have different demographics and psychographics, and you need to sell to each customer segment differently. This is especially important when you sell to the rich. Matt Builder, a luxury home builder, wrote:
"...it's important to consider exclusivity in your product design in addition to the way that you promote it. To market a product as a luxury product, you must first set it apart with rare materials, special features or a high level of personal customization."
4. Don't do it all on your own.
While keeping expenses low is important, hire as soon as you can. You can't do it all; if you want to scale your business, you will need help.
Who you need to hire first will depend on two things: 1) what you're good at and 2) what you're not good at. And generally, here are the first four people you should hire:
A great #2 to help you implement your ideas.
An assistant to help you manage your schedule and take over low-value, distracting tasks e.g. errands.
A bookkeeper/accountant to help you save money, which is especially key in bad times.
A salesperson to help you bring in the $$$!
If you need more tips, here's an excellent article from the Inc. staff. Go kick some ass :)