Yaneek Page Making your business recession-proof
Is it possible to make your business recession proof? That’s a question that should be top of mind for all business owners, particularly those operating in small island developing states like Jamaica, amid the July 2022 report from the International Monetary Fund, IMF, and the findings of the recent business and consumer confidence survey for Jamaica.
Before I offer some strategies for making your business more resilient and recession-proof, it’s important to paint a clear picture of the current grim economic forecasts that will necessitate aggressive business planning and action, particularly in enterprise-wide risk management.
The IMF described the world’s economic outlook for the rest of 2022 and 2023 as “gloomy and more uncertain”, in its blog post of Friday, July 29, regarding its most recent report. It’s a strong caution to the world that the global economy is in a pickle.
According to the fund, the much-celebrated early recovery from the global pandemic, which was experienced in 2021, has been fleeting and “tentative” as the ominous risks of economic downturn have now materialised. Global economic growth has been revised downward to 3.2 per cent, when compared to 6.1 per cent in 2021. Of note is that this new revision is 0.4 percentage points lower than the April 2022 projection.
As at today, the IMF expects that the 2023 global output will expand by a modest 2.9 per cent. The IMF concluded its statement on the global economic outlook with a desperate call for “urgent multilateral action to limit emissions and raise investments to hasten the green transition” as critical mitigating actions for climate change.
Jamaica should also take special note of the IMF’s warning of likely “debt distress in emerging markets and developing economies”.
It is unlikely that Jamaica, already battle weary from the COVID-19 budget blows and shutdowns, will escape the realities of the economic shocks that continue to rock the world, such as supply chain predicaments, high inflation, tighter financial controls, negative spillover from the war in Ukraine, among others.
Pessimistic outlook
Indeed, business and consumer confidence in Jamaica is now, unfortunately, closely aligned to the gloomy projection from the IMF. Earlier last week, in an article titled ‘Confidence Flat Amid Pessimistic Expectations of Hard Times for Business and Consumers’, The Gleaner shared highlights from the most recent quarterly Jamaica Conference Board Survey of Business and Consumer Confidence, which point to a lack of optimism about the economy and an expectation that the country will be facing tougher times.
Let’s look at strategies for making your business recession proof.
This may appear contradictory, however, the first action must be a commitment to maintaining high hopes and engendering the spirit of optimism. The reality is that talking down the economy, and cowering in fear over the looming economic contraction, may result in a self-fulfilling prophecy that actually worsens outcomes. Business owners, leaders, and managers must be strategic in their communications with team members, partners, stakeholders, and customers. Positive language, optimistic messaging, and a solutions-first approach to managing a potential downturn will augur well in motivating team members and the communities being served.
Strengthening market intelligence gathering is one of the most critical actions that businesses need to take now, which will enhance decision making, allow for faster pivots, and greater flexibility and adaptability.
In simple terms, this means that the business must aggressively gather and analyse information that is relevant to its industry, the competitive landscape, and customer insights. Leveraging networks and collaborating with other businesses may be a very helpful strategy to navigate impending external challenges.
Laser focus
Now is the time to be laser-focused on customer retention, and new customer acquisition, and where possible, customer upsell. Changes in the economic environment will almost always necessitate changes in how consumers consume, how they spend, their needs and future plans. This is the time to strengthen customer relationships through deep engagement. Key actions in this area would include customer calls, or visits, or communications aimed at solidifying relationships and solutions as their needs evolve. The stronger your relationship with customers is the better positioned you will be to deliver relevant products and services to retain customers.
This is also a time to prospect for new customers because every major shift in inflation will affect their budgets. Quite often they will cut back in some areas and look for more affordable options in others. It is possible to gain new customers who will select your products and services in alignment with their pockets.
Finally, managing financial risks at this time should be the major focus of risk mitigation. There will be tightening in money lending and increased interest rates. Now is the time to revise budgets, include tighter cash-flow management, particularly around collections and expenditures.
Businesses need to manage expenses and contain costs as necessary, ensuring that expenditure is aligned to resilient internal cash flows, particularly within the context of the economic realities of the markets in which they operate. It’s time to plan, prepare, and execute with optimism.
One love!
Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of The Innovators and Let’s Make Peace TV series. yaneek.page@gmail.com