Top 5 Business Mistakes During a Recession

5 Biggest Mistakes Businesses Make in a Recession

Recessions strike when businesses least expect them, catching many off guard and exposing critical business recession mistakes. Like a pop quiz, they happen out of nowhere and test you on everything you thought you had figured out, but quickly realise you have so much more left to learn. A recession can leave you feeling panicked and reacting too quickly or too slowly to a solution. 

Unfortunately, in most cases, when we act without enough forethought—or with too much forethought—we tend to end up making mistakes. If you want to keep your business afloat during a recession, here are the biggest business recession mistakes you must avoid at all costs.

Cutting Everything at Once

When your revenue drops, most people’s first instinct is to start slashing costs in a panic. Unfortunately, while cutting your marketing budget and training budget may seem like you’re doing yourself a favour, this is a really poor choice. 

Making too many cutbacks can leave you without the tools and ultimately susceptible to making mistakes. Instead of cutting everything all at once, cut back on non-essentials, and continue to protect the things that drive your long-term success. Anything that breeds customer retention and brand visibility should be protected at all costs, as these are important aspects of keeping your business strong.

Ignoring Your Customers

Sometimes when we’re in panic mode, we start neglecting important matters since we are so laser-focused on solving the problem at hand. However, instead of getting caught up in spreadsheets and panic-mode strategy sessions, don’t forget the people who keep your business afloat: your customers. 

When you’re in a recession, your customers are also stressed, and they’re looking for brands they can rely on. Keep the conversation going with your customers, and get a feel for how they’re doing. They can be one of your greatest sources for ideas and ways to innovate on your current products and services.

Putting All Your Eggs in One Basket

If you put all your eggs in one basket—in other words, depend too much on one single product or service or client—you’re putting yourself at risk. During a recession, you need to diversify in as many ways as possible. Even a few small income streams from various places can give you greater stability and more chances of survival, even when times are as unpredictable as ever.

Not Communicating With Your Team

It’s normal to feel stressed out as a boss when a recession hits. After all, all of the pressure falls on your shoulders to make sure everything gets done. However, your employees are likely feeling the pressure too, and they’re relying on you to lead them. You must communicate with your team and be as honest and open as possible. Share your plan with them, and allow them to give feedback.

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