How To Recession Proof Your Business in 7 Key Steps

As we move toward the final quarter of 2022 and 2023 approaches faster than we all would like, we are being met as business owners with another big challenge ahead according to the media…. an economic crisis!

Before I dive straight into my 7 key steps to recession proofing your business, I want to clear something up. I am not an economist, but what I do know is this: recessions are a normal part of a business cycle. We have had them before, and we will have them again.

That being said, inflation rate rises are largely due to the £17 trillion pounds created by the central banks and pumped into our economy during Covid-19, at at the same time as supply being constrained! So, what we are in fact seeing is a transition to pre-covid levels. In other words, it is not a crisis! The slowdown is not necessarily a recession as such, it’s the system moving to a more sustainable level.

Maslow’s Hierarchy of Needs

Before we fire into the 7 steps to recession proofing your studio or clinic, I want to introduce you to the famous Maslow’s Hierarchy of Needs.

Maslow’s Hierarchy of Needs, simply put, shows a motivational theory in psychology. A five-tier model of human needs.

From the bottom of the hierarchy upwards, the needs are physiological (food and clothing), safety (job security), love and belonging needs (friendship), esteem, and self-actualization.

Those needs lower down in the hierarchy must be satisfied and met before individuals can attend to needs higher up.

What we are seeing here, is that as professionals in the health and wellness industry, we are second in the hierarchy of needs. Our customers, ideal clients, and patients’ pains and problems don’t disappear in an economic crisis. In most cases, they actually get worse.

Why the role of the health & wellness professional is more essential than ever

Our population is living in a stress system. Adrenaline and cortisol are running the show and are a major contributors to pain, anxiety, mental health issues, digestive issues, cardiac issues, and I could go on!

When people are led by fear deficiency, needs arise due to deprivation and are said to motivate people when they are unmet. Also, the motivation to fulfil such needs will become stronger the longer the duration they are denied.

What we need to focus on here is the opportunity that can arise in the face of challenges and to control the controllables! That is how we ‘react’ to any possible ‘economic crisis/system moving to a more sustainable level’.

Let’s remember, where there is a challenge there is an opportunity, and we must remain consistent and relevant, deliver high on value, and lead from the front.

Video: 7 steps for recession-proofing your business

Let’s get into my seven steps to recession-proofing your business. You can use the video below to watch or listen if you prefer.

1. Know your numbers

I know you will quiver at the thought of this because so many of my clients admit this is their biggest challenge. But I must stress the importance of knowing your numbers. Specifically, cash is king in your business right now, and you should be prioritising profit over growth. Look at what areas of your business have the best margins and create the best profit and focus on this.

Creating a cash flow forecast is also really important. This allows you to look at your cash position and pinpoint the tricky points. This could be for example when your tax is due or perhaps your corporation tax. Predicting when you have these larger one-off payments can help you plan for them. It doesn’t matter the size of your business. Having one is going to be crucial in the future. You can ask a bookkeeper or your accountant to produce one for you.

As explained in my video, I also like to know my numbers in a tangible way. Knowing what you need in £’s is one thing, but then working out how many people you need on a Pilates mat in one month or week, or how many massages that means you need to do in a week and month to hit that target. This gives you much more focus and clarity.

2. Don’t stop marketing

Business owners who hide, who don’t commit to standing out and standing up for their values and passion and mission are at higher risk of failure. Be bold…. Be consistent… be valuable and keep marketing!

3. Track your marketing

Make sure you have multiple marketing streams and track what is working. If it’s not working – stop! But set clear targets and plans for your marketing based on how many customers you need. Look at where you are spending your time, is organic social posting that takes you hours and does not bring you paying clients the best use of your time? Be ruthless, be strategic, and know what is working and not working.

3. Track your marketing

Make sure you have multiple marketing streams and track what is working. If it’s not working – stop! But set clear targets and plans for your marketing based on how many customers you need. Look at where you are spending your time, is organic social posting that takes you hours and does not bring you paying clients the best use of your time? Be ruthless, be strategic, and know what is working and not working.

4. Adapt your business

Think outside the box, think about how you can continue to provide amazing value to your clients and think about diversifying your service or product. Let me provide some examples for inspiration.

We have recently launched a 0–6-week postnatal program for new mums. It has allowed us to offer a lower-end price product for a market who are on maternity leave and struggling to access other support. It also provides support to a group of clients where support and education are lacking. We have also created another income stream.

We believe that Pilates is about consistency and as a result of that we don’t allow anyone to join our Pilates for any less than three months. We are committed to their results, and this is how we can help support them to achieve them.

However, we also are aware of the media and the cost-of-living increase and the impact that may have as we hit the winter months. We have created the ability for existing members to add a short course to their membership, which means we have offered flexibility through lower commitment.

Think outside the box and think about what you can do to help solve the problems your clients have and create diversification in your income streams (by the way – this doesn’t mean you have to offer low monetary value solutions).

5. Invest in your client relationships

80% of your income will often come from 20% of your clients, or 80% of your income will come from 20% of your marketing activities. Take the time to recognise and nurture your clients. Remember connection is key and creating communities is vital.

You want to be something someone cannot do without. This takes consistent work, focusing on value, and recognising loyalty. Those customers are likely to purchase more from you and constantly trying to get new clients costs money. Nurture your supporters.

6. Maintain perspective

Remember this is a normal business cycle, it will pass. Keep decision-making firmly anchored in the long term. Don’t focus too much on the short term. Remain strategic, remain consistent and follow your plan.

7. Stay entrepreneurial and lead the pack

Concentrate on what you can control. Approach the recession like any disruption. It’s an opportunity for you to find new ways to provide value, new revenue streams, and new ways of working.

If you have a team, lead from the front. Invest time in your team and build morale. You will create a team that will go above and beyond, and you need people on your wagon all pushing in the same direction.

There is that which you know you know. There is that which you know you don’t know. And there is that which you don’t know you don’t know yet! Those that seek help and support will thrive, so surround yourself with those who lift you up, motivate you, and can guide and help you.

Join our Facebook group

If you’ve enjoyed this article, make sure to join our Facebook Group where you will be able to register for our 5 upcoming Recession Supersession workshops through September & October. In these workshops, we will be expanding upon the steps discussed above, as well as providing the opportunity to dive deeper into your own situation.

Don’t feel alone, come and join us!

https://www.facebook.com/groups/thrivebusinesscoaching

Thank you for reading, and remember, the road to success is dotted with many tempting parking spaces! DO NOT STOP!