Dr. Eric George, Founder and CEO of ERG Enterprises. Nationally recognized thought leader on entrepreneurship, investing and leadership.
Adversity creates opportunity—recessions included.
That may seem difficult to grasp as revenues slow, expenses grow and funding seemingly dries. The difficulty of entrepreneurship—already a difficult profession—climbs. Meanwhile, the odds your business survives seem to free fall.
Yet the devastating effect of a recession need not be a reality. Fourteen recessions have come and gone in the U.S. since the Great Depression of the ’30s. Meanwhile, generations of entrepreneurs have managed to build remarkable businesses despite the tumult, myself included. In fact, I managed to start or grow businesses during the financial crisis of 2008 and the Covid-19 pandemic.
In this post, I share three moves you can make to thrive in a recession—based on my more than three decades as a serial entrepreneur, private investor and full-time surgeon.
1. Strengthen your partnerships.
No great deal can compensate for a bad partner. But a good partner can make even a subpar project worthwhile.
I fundamentally believe partnerships are a key driver of business growth—no matter what business you’re in. My early partnerships helped me start and grow Omega Hospital—what today remains one of the last remaining physician-owned freestanding hospitals in the Southeastern U.S. Partners helped me start my private investment firm, ERG Enterprises, and begin founding or investing in businesses in more than five industries.
Partners taught me about business. They extended my expertise and capabilities. They also provided a hedge in uncertain times—and continue to do so today.
Partnerships come in different forms. There are strategic ones that can open new streams of revenue or accelerate existing ones. There are vendor relationships that can augment your operations and services with vital sources of know-how. There are also board members, mentors, professional connections and more. Partners can serve your business. They can also serve you directly as an entrepreneur.
Like any aspect of your business, partners need care and nurturing—in good times and especially in bad. Here are a few ways to support your partners:
Communicate regularly.
Establish a regular cadence for communicating with partners, whether via standing meetings, phone, email or social media.
Make introductions.
Introduce your partners to vendors, other partners or even customers who can provide them value without impacting your business.
Be of service.
Extend a helping hand to your partners in times of need. This can be a personal offer of support. When Hurricane Katrina hit, followed by Hurricane Ida many years later, I received calls, texts and emails from several partners. I still remember that to this day. So would anyone else in my shoes.
2. Nurture your target customers.
Every business has a target customer, but not every customer is a “target.” A target is the customer who values not only what you provide but how and when you provide it. They provide testimonials. They market for you through references and word of mouth.
If none of your customers fit this description, then you may need to sharpen or realign your business focus, something I’ve written about previously.
Yet if some of your customers fall into this cohort, you should pay special attention to them in general, especially in recessionary times. Why? For one, the free marketing I mentioned. More importantly, they renew, which is anywhere from five to 25 times less expensive than acquiring a new customer.
So, what should you do? Beyond the fundamentals of customer service and success, do this:
Give your customers voice.
Empower your top clients to take ownership of new service offerings, technological developments and the future of the business.
Recognize your customers.
Recognize your top customers through loyalty programs, during annual events or in other ways that make sense for your business.
Lean into multimodal communication.
Keep the communication lines open with your customers.
Maximize your touchpoints.
Understand the customer journey and optimize their experience.
3. Invest in your people.
A common denominator of every successful business I’ve started or invested in? Talent. An essential variable in the business growth equation. Yet one that can seem as elusive as a great product innovation. If you don’t have top performers, recessions can provide the opportunity to acquire them. If you do, consider yourself lucky. Do what you can to make sure they stick around.
For me, my most talented employees have helped our businesses thrive in turbulent times. Whether boosting gross margins through workflow optimizations or strategic negotiations, they’ve helped find savings, increase efficiencies and even develop new revenue streams.
To keep your top performers, do this:
Be generous with your time and knowledge.
Reward your top performers with something invaluable: your know-how. Offer it regularly and when appropriate.
Be fair with your compensation.
Top talent generates far more value than any competitive benchmark. Avoid trying to save in compensation what you’ll likely lose in long-term value.
Be genuine and empathic.
Be genuine in how you lead and mentor. Inspiring others requires your authenticity.
To find top performers, do this:
Monitor the headlines and social media.
Pay special attention to news of layoffs, especially those involving your top competitors. Send a message to potential candidates you want to acquire.
Leverage your partners.
Message your partners to let them know about a position you’re looking to fill or your interest in adding the right candidate to your team.
Adopt a sustainable mindset.
When making the moves presented in this article, make sure you choose a pace and approach you can sustain long term. Because here’s the secret: What I’ve just described works regardless of the economic climate. Your partners, customers and employees don’t guarantee your success, but they each play a protagonist’s role in it.
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