Yesterday, as I prepared to send out the bi-weekly Construction Marketing Ideas newsletter, I noticed Tim Klabunde's blog posting, How to Market in a Recession, and set a one-line last minute link to his site. The Constant Contact survey tracking data shows that almost three dozen people linked forward to his site -- more than double any other topic.
So, clearly, this matter is vitally important to many people. Not surprisingly. If the overall economy is in a slump and your business is affected by the downturn (perhaps even more than the norm, considering how this recession originated), then obviously you need to be aware, and take measures.
Tim's advice of course is solid and responsible:
Focus on your existing clients and services. It is easy to want to expand into new markets during a recession. The problem is that during a recession work is much harder to come by, both in the markets you currently serve as well as in markets that you don’t serve. Expanding into a new market requires both time to enter the market and money: two things that are not readily available during a recession. As a result, a recession is not the time to expand into new markets, but rather it is the time to focus on your existing clients and services.Tim is absolutely right about the dangers of extension/over expansion during recessions. I remember the folly of this practice much earlier in my business life, during the 91-93 recession. With sales slowing down, I decided on two measures, one wise, and one dumb.
The goal during a recession is to focus on bringing work in the door immediately. Most marketers will tell you that the fastest, least expensive, and easiest way to bring in new work is to focus on your existing clientele (that is people you have already sold to previously, or others in the same industry that are familiar with your work).
Wisely, I decided to see if any of our readers receiving the free local construction news publication would be willing to pay for a subscription to guarantee delivery. Some 200 orders arrived within a couple of weeks. Although subscription revenue continues to be a very small part of our business, the overall revenue from renewed subscriptions over the decades is not insignificant (and the cash really helped short-term).
My dumb mistake was to start another publication in a different topic from Construction. I thought "Food Service and Hospitality News" would work locally, and we designed a really good-looking paper, built a list, found some early advertisers, and sent it out. I even got some news coverage on a local television station. Trouble is, the effort to put this publication out drained cash and resources (scarce) from our existing publications, and pushed the business to the edge. And, perhaps spoiled by the great response to subscription requests for the construction publication, I really was disappointed to receive only six or seven subscription orders for the food service paper.
The crisis and cash crunch that followed nearly put me out of business. I pulled through with support from contractors and clients and (on a personal level) a mortgage holder who took an overextended property off my hands without pushing bankruptcy or messing my credit.
As challenging times return, I remember these points clearly. We've developed tools and tests to reduce market expansion risk (geographically) so should be able to grow, even in challenging conditions, but if you think I am going to carelessly go into the wild blue yonder to seek new clients, I'll remember well that food service publication and near business disaster back in the 1990s.
Remember, if 80 per cent of your business is from repeat or referral clients (and this applies if you are a recessionary start-up; your personal network is probably what will get you going), forays out of your market to dig up new business will likely fail. Tim Klabunde is absolutely correct here. Focus on your existing clients.