Steps to safeguarding
An economic recession, simplified, is an issue of cash scarcity. Therefore, all your business decisions from here on out must aim to achieve improved cash liquidity.
There are two ways of making decisions: follow your gut or follow the data.
Here are the data-based steps that can help you make financially sound decisions:
1. Monitor the recession in your market and other markets that relate to your supply chain. This will help you see possible gaps, crises, or opportunities just in time to make necessary adjustments.
2. Stop the bleeding. Review your investments: what are you possibly pouring money and time into that is not bringing in the favored return? For example, it might be an app that still needs time and spend to get a better pick-up pace, it could be worth considering postponing launch to more stable times.
3. Stay on top of consumer data. More specifically look at consumption and purchase trends when it comes to:
- Your product and your key competitor’s product—look for patterns of frequency of purchase, as well as an analysis of the different channels.
- The category in general—is it growing, stable or declining? If bigger brands are doing better than yours, then it is important to look at changes in pricing, SKUs or promotion.
- Complimentary categories. Seeing purchase pattern changes in complementary categories could be an early sign that you might need to make a quick adjustment. For example, coffee manufacturers could look to consumption changes of creamers over a period of time to foresee a trend.
- If your product is not considered an “essential” item, monitor how consumers in your market are spending on key categories. It is a strong indicator of the state of household budgeting.
4. Take a good look at your price and offers. Although pricing and promotion usually go together in CPG, manufacturers do not have as much control over in-store promotions that are run by the retailer. So focusing on consistently and accurately pricing products is an important skill for smaller brands to practice. Pricing is one of the most important competitive levers in your control.
5. Make your product functional. The data shows that in times of inflation, functionality of a product always wins. Find out what that means for the SMB consumers in your market and check your product against it.
6. Adjust your marketing. Include the emotional motivators that drive consumers to make a purchase.
7. Aim to grow. Business growth can be achieved in many ways:
- New customer acquisition: There are four types of consumers in relation to SMBs, and your growth lies in how you acquire a greater share in two (or possibly three) of those segments. in relation to SMB’s, and your growth lies in how you acquire a greater share in two (or possibly three) of those segments.
- Target the right channels.
- Innovate intelligently.
- Understand the funding and support your government provides to small businesses and take advantage. The assurances they need lie within the data you gather for a category review, and the proof of product-market fit.