Why Companies Go Out of Business During a Recession

Going out of business is avoidable during a recession. Sometimes. 

A lot of times, what happens with people during a recession is they stop doing certain things that will actually make them money. 

And in this article, I’m gonna walk you through what you need to do to make sure that when a recession hits that you don’t go out of business.

For those of you guys that are reading in the USA, you know that we are dealing with some challenges in the USA right now and all across the world because of so many things going on.

And because of what happened with the pandemic that started back in 2019, it’s all just kind of exploded over the last couple of years.  Plus the war that is unfortunately happening in Ukraine.

And so we as a country have been talking all about what’s happening with the recession and we’re just watching layoffs and other things happen. 

And today, I really just wanna give you some of my tips on what you can do as a business, especially if you are a small business. 

So the number one thing that most businesses do when a recession hits, they stop marketing.

They feel like we’re gonna cut our budget for marketing so that we can keep the company afloat.

But what business owners don’t really realize is that once you stop marketing, you kind of go into hiding.  

And so if you were normally marketing your business, that’s what would drive customers. Whether it’s existing customers or new customers.  

That’s normally what happens to help you make sales in the business. 

And once you stop marketing, you are outta sight out of mind. 

Just think about it. 

There’s some people in your life that you don’t remember. There’s some businesses right now that you don’t remember because you don’t see the marketing. 

Now we all know Netflix, Hulu, Peacock, and then we all learned about Tubi, during the Super Bowl.

But if we think about it, there’s some other people that we don’t really see advertising a whole lot. 

Like, we don’t see Showtime advertising a lot. They’re still in business, but we don’t see them advertising a lot.  

We don’t see Blockbuster or RedBox advertising a lot because you know of what’s been happening in their businesses or whatever.

And so when you choose to stop marketing during a recession, you’re actually pulling back and hiding your business, which could lead to your business going out of business a lot faster. 

Right now, I’m not saying that you shouldn’t tighten your budget around marketing, but this is the time when you really wanna start figuring it out. 

What are some ways we can still market our business in a way that still helps us reach our existing audience and help us reach a new audience? 

That’s what actually should be happening during a recession versus pulling back. 

So the number one thing that people, unfortunately do wrong during a recession is marketing.

Now what can you do? 

Well, if you are someone and you run a lot of billboards or TV or paid ads. This is an opportunity for you to be able to do organic marketing. 

This is an opportunity for you to be able to use email marketing where you’re getting your customers to give you their email addresses, that way you’re able to contact them and all the things because email marketing is free now. 

It costs you your monthly fee for whatever platform that you’re using, but you are able to send messages to your customers on a regular basis, and it doesn’t cost you anything. 

Also, text message marketing, that is gonna save the day as well.  

Because if you’ve got a 100, 200, 500, a thousand, or a 10,000 or however many people you have on a text message system. 

And when you have a new offer or you just wanna talk about something existing that you have, well, you can send one text message and then all these people are gonna be notified about your offer and it doesn’t really cost you anything. 

Except maybe your monthly fee as you’re paying for a text service. 

Then you’ve got social media. 

Yes, you can run ads on social media, but you can also do organic content. 

You know, I am someone who teaches TikTok all day, every day, and your company could be learning how to use TikTok marketing or have someone like us where we can run your accounts on TikTok for you. 

And that’s organic marketing to be able to reach more of your target customers a lot faster. 

Then you’ve got Instagram, Facebook, Facebook reels, YouTube. You got all these different things you could be doing. 

Plus you could be writing blog posts to get your name out there from a marketing perspective.

And you could be doing this through organic marketing. 

So if you haven’t developed an organic marketing strategy for your business, now is definitely the time to do so. 

It’s not the time to pull back.

The second thing people do during a recession is they don’t focus on getting new customers, and you have to be focusing on getting new customers because when a recession is hitting people, everybody is dealing with financial things. 

Whether that is you as a business. But it’s also maybe your customers, right?

And so you can’t just keep focusing on getting the same people to come into your store or buying your thing over and over again if they don’t have a need for it. 

So this is why I was talking earlier, about marketing, why you have to also continue marketing your business to new people.

Because again, your existing customer is dealing with some of the same things that you are, except that they may not run a business or may have or whatever’s going on.  

So you have to be getting new customers. 

This is another reason why if you are restricting your budget a little bit but then you can use organic marketing to be able to reach your existing customers and your new customers.

So that’s number two.

The third way to avoid having issues with going out of business during a recession is to make sure that you go ahead and cut some unnecessary expenses that you can add in later. 

So what does that mean? 

Again, I shared that one of the reasons why people go out of business is because they don’t market, but it’s also because they don’t cut unnecessary expenses.

Right now, marketing is necessary. 

For example, we’re a small business and we have subscriptions where we pay for a podcast player, whether it is a software or whatever it is. 

Now, before we actually have these financial troubles, my job is to look at what all we are spending our money on? 

Like what’s going out the door on a regular basis and what is it that we are using and not using? 

Like I found something that was a thousand dollars a year and I was like, “we don’t use that” 

And we use DropBox for our files and we had an old employee have access to that Dropbox folder. 

Right now it was through her company email, so once she left, she was still just there taking up space and costing us per person to be in Dropbox. 

We also use Slack for our employees, and so it’s our job to go. “Okay. let’s remove people from Slack that are no longer with the company that are taking up space, but also costing us to have a seat in Slack”

So if you haven’t really looked at what you are spending your money on as a business owner, I suggest you should really look at those things. 

It’s like where you actually have money that can be in the bank versus constantly going out, right?

I know myself as a person. All the time, I’m always like, “okay, am I going to that gym or am I using the gym that is at my apartment complex?” 

I’m using the gym at my apartment complex. 

“Am I really watching Netflix and Hulu and HBO or am I just watching HBO”

And when I really look at that, I go, “Okay, I’m just watching this and this. Cancel that”

And so those are some of the things we should be doing anyway to just avoid paying for unnecessary things over and over again. 

That we don’t have to or we shouldn’t be doing. 

That could really help you as a person, but also as a business as we are dealing with the recession here in the United States.

And so, that’s it. 

I just want to give you some tips on what you should be doing or what some of your friends or whomever should be doing during a recession to keep from going out of business. 

And so if you found this article valuable, I want you to go ahead and click like, and leave a comment below. 

Furthermore, I mentioned above that we do manage some of our clients TikTok accounts. Our TikTok management service helps brands and businesses leverage TikTok to achieve greater visibility and drive more sales.

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