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4 Tips for how to restart a business after a downturn

If you need to start (or restart) your business during an economic downturn, these four tips can help you take advantage of emerging economic opportunities.

Looking to rebuild your organization or start a new venture? Consider these tips to rethink your current business model while also finding new opportunities during a downturn.

 

#1 Understand your customers’ shifting economic reality

As part of reworking or rebuilding your organization, keep in mind your customers’ changing mindset on spending. According to the Harvard Business Review1 most consumers fall into one of four broad categories during an economic downturn:

  • Slam-on-the-brakes: Consumers who aggressively reduce all spending.
  • Pained-but-patient: Consumers who economize their spending but remain optimistic about the long term. This segment typically makes up the largest segment of the population.
  • Comfortably well-off: Consumers who have been minimally impacted by an economic downturn. They purchase at nearly the same level but may be more selective.
  • Live-for-today: Consumers who remain unconcerned about savings.1

 

In the midst of, or immediately following an economic downturn, it’s often helpful to reevaluate what your organization knows about your customers in order to refine your promotional offer and discount strategy to speak to their new circumstances.

 

#2 Consider which products and services best suit your customers and organization

Economic downturns are often defined by uncertainty—not only in terms of when they will end, but also in how they’ll impact customer behavior. This change in behavior often leads to changing demand for products and services. For instance, in March, U.S.-based Burpee Seeds sold more seed than at any point in its 144-year history.2 As consumers spent more time at home and looked for ways to stretch their budget, interest in planting seeds and growing a garden blossomed.

 

While it may not make sense for your stone yard or your contracting service to start selling tomato seeds, you might think about what ancillary services you could offer to the booming market of home gardeners. For example, the stone yard might expand the space it dedicates to sands and soils or add a new organic fertilizer to its inventory. Similarly, the contracting service could promote their availability for tilling and installing drip irrigation.

 

As part of your overall audit, look at whether your organization’s offerings align with new consumer behavior.

 

Use these questions as a guide:

  • Which products and services are the most popular at present?
    • See where other businesses are succeeding. Maybe there’s a niche your organization can fill, or maybe you can find a creative way to join or service a newly popular industry.
  • Which of these popular products and services have the highest profit margins?
    • Before you jump on the bandwagon for a hot product, make sure it’s worth your effort. Will the market be saturated before you can make a profit? Will selling the product require investments in more personnel, space, or energy that could cut into your profits?
  • Which products can our organization reliably source in order to meet consumer demand?
    • Think through the logistics of the parts and supplies you’ll need to deliver a high-quality product, and make sure your supply chain is intact and ready to deliver.
  • Are there any new products or services that can be organically incorporated into our brand or organizational structure?
    • As the home-gardening example illustrates, it may be possible to expand upon your product offerings in a way that strengthens your overall business strategy. 

 

#3 Streamline manual processes with digital solutions

From purchasing to making payments, digital solutions can help drive efficiencies and cut down on administrative headaches. These efficiencies can give you time back to focus on your business.

 

Having more time to spend on residents' needs, and less time on paperwork, were two of the goals Cortland's procurement leadership team had when looking into digital solutions for their nationwide organization of over 60,000 apartment homes. Each of Cortland's 180 communities was purchasing for their own needs using a purchasing card account (P-Cards) and then tracking these purchases with expense reporting.

 

“Our community managers were spending too much time ordering, expensing, and waiting for what they needed to keep the communities running smoothly, whereas their time would be better spend outside of the office ensuring our residents were getting an excellent standard of service,” explains Jonathan Kirn, Director of Ancillary Services at Cortland.

 

To save time and better track spending, Cortland now uses a feature within Amazon Business’s Pay by Invoice to allow its communities to order everything they need on a monthly basis against a credit line. They set up Pay by Invoice, which is a purchasing line available to eligible organizations, to receive one invoice from Amazon Business all while getting extended payment terms. This way, each community can open one purchase order every month within their existing accounting system, receive one detailed invoice from Amazon Business for all their orders, and process one payment. Using Pay by Invoice gives the procurement team more visibility into spending and trends while also eliminating the need for P-Cards.

 

#4 Identify options to tap into capital

Regardless of whether you’re starting or restarting an organization, you’ll likely require an upfront capital investment. There are numerous ways to access that capital, but credit products make it easy to get (and keep) your business going when your cash is limited. 

Amazon Business offers:

 
 

1 https://hbr.org/2009/04/how-to-market-in-a-downturn-2

2 https://www.reuters.com/article/us-health-coronavirus-gardens/home-gardening-blooms-around-the-world-during-coronavirus-lockdowns-idUSKBN2220D3

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