It always seems like if it’s not a widespread pandemic, it’s a strike. Economic downturns are common in the big picture, and not preparing for multiple scenarios leaves a company vulnerable and at a competitive disadvantage. In times like these, having a “You Are Here” sign seen in malls and busy cities would be beneficial. This map could show how close (or far) away milestones are and how long it takes to get there.
As economists become wary that the slowdown will become a recession in 2025, businesses expect to experience a decline in demand. Luckily, the port worker strike announced on October 1st ended quickly and should not exacerbate demand shortages.
While cost-cutting methods like overtime pay reduction or staff layoffs may seem like viable options, they are proven to affect morale and decrease quality and efforts over time. Your “You Are Here” location is more likely to move away from your goals instead of toward them. Instead, a more practical and affordable business choice is to analyze budgets for outdated, redundant, or trivial transactions.
When reviewing a quarterly or annual budget, it’s common for a busy C-suite executive to overlook a seemingly inconsequential purchase. According to JP Morgan, 79% of midsized businesses notice increasing costs, with roughly one in three business owners are sourcing it as a concern for 2024 and the upcoming year. To rise in the competitive ranks, a business owner needs to be a few steps ahead of the rest.
The Value of Reinvesting
An exciting aspect of competitive innovation is examining the newfound potential. As far as looking at your “You Are Here” map, these are the monumental steps taken to reach milestones and increase ROI. After analyzing fiscal budgets, decreased day-to-day spending makes it easier to reinvest in the company and focus on client satisfaction. With customer satisfaction at its lowest point in two decades, more companies are following their customer journey, utilizing surveys, and course-correcting where they lack to increase efficiency and company value.
New technologies and AI, ordering additional materials, marketing efforts, and streamlined processes are opportunities to build resilience toward an economic downturn. For instance, during The Great Recession from 2007 to 2009, Lego struggled like many other businesses in the United States market. To navigate this dip, they began marketing to the European and Asian markets as well. This pivot gave Lego global recognition and all-time-high profits in the midst of a recession. Regardless of supply chain delays, surging material prices, or dips in demand, a consistent business through a recession creates loyalty among customers, with 55% of customers sharing that they would pay more for an experience they are confident will be positive.
With many businesses jumping to action only when a crisis arises, a company prepared for emergencies is more likely to survive a recession and boost profits as well. Building a business resistant to economic downturn affects short-term performance and, more importantly, long-term sustainability. With a plan already in place, this business can move quickly, creating a competitive advantage and customer reliability. As benchmarks appear and milestones are achieved, continuously ask, “Where am I now?” And by evaluating, you will know the answer. For more on the latest industry news, view our insights and client success.
About the Author
James Sayer is a ERA Group Consulting Partner based out of Dayton, Ohio, with experience in business consulting, sales, and litigation technology analysis.