The year 2024 began with fears of a possible economic recession. However, more than halfway through the year, the anticipated recession has yet to occur, but we are still in the woods. Many economists anticipated an economic downturn in 2024, and as the year has progressed, this prediction has become a reality.
Economic downturn Indicators
Some of the indicators of slow economic growth that we are already seeing in 2024 and expected to prevail into 2025 include:
1. Rising unemployment
According to the International Labour Organization, the unemployment rate was 5.1% in 2023, and in 2024, an additional almost 2 million have joined the unemployed, raising the rate by 1%. An increase in the unemployment rate means fewer people have an income to spend. This translates to lower consumerism and lower demand for products and services. As a result, there is a lower growth rate, leading to more unemployment if businesses have to let go of employees. This negative multiplier continues in a vicious cycle that creates slow economic growth globally.
2. Decline in industrial production
In 2020, global manufacturing output dropped by 4.2% due to the COVID-19 pandemic. However, in 2021, the sector recovered by a remarkable 9.4% growth. While many hoped this uptake would prevail, it has not been the case. In Q1 2024, global industrial production grew by less than 1% compared to the same period in 2023. Industrial production is vital in sustaining both developing and advanced economies, which is why this decline in industrial production has influenced an economic downturn.
3. Housing market slowdown
The real estate industry has struggled with home sales due to central banks tightening interest rates, which have raised the costs of mortgage financing. The lack of easy access to credit has resulted in low sales. The housing market has a significant effect on the economy globally; therefore, a struggling housing market is directly related to slow economic growth.
Now that you understand what is influencing this slow economic growth, what strategies can you employ in your business to ensure it survives this storm? Here are the four best business survival strategies to employ during slow economic growth.
4. Invest in innovation
Investing in innovation is one of the strategies that will keep your business afloat during an economic downturn and even achieve the next stage of growth. However, innovative initiatives to invest in will differ depending on the business’s nature.
For some businesses, innovation will look like investing in better equipment to improve production efficiency. For other businesses, innovation may take the form of moving operations online to reduce costs, e.g., closing up a physical restaurant to offer food delivery only or running online casinos instead of a physical one. In some businesses, innovation can be investing in software and tools in accounting or marketing to streamline processes and reduce manpower.
The ultimate goal is to invest in innovation that will result in time and money that you can put back into your business to help the business survive and maybe even thrive during this period of slow economic growth.
5. Focus on client retention
Surviving as a business when the economy is barely growing calls for creating more opportunities to sell. One of the easiest strategies you can employ to increase sales is by ensuring client satisfaction. Happy clients generate more sales for you by becoming returning customers and referring your businesses to other potential customers. Some of the strategies you can apply to guarantee client satisfaction and promote client retention include:
- Understand what your clients expect and offer that
- Strive to offer unique and timely services to clients
- Increase client touch points to foster trust
- Collect client feedback for improvements
- Build your business with the client in mind
6. Cut non-revenue-generating expenses
Surviving during slow economic growth requires you to make tough business decisions. One of them is to take all measures necessary to eliminate expenditure waste. It is key to audit your business expenses and cut out any that do not produce the desired ROI. This survival strategy also includes releasing non-productive staff. Cutting out non-revenue-generating expenses ensures your business finances only on what contributes to its growth.
7. Review numbers regularly
With the economy being very uncertain, you must get back on the drawing board regularly and refocus and restrategize your business’s future. One of the most effective ways to make financially sound business decisions is to let the data inform you. This data can be obtained through staff reviews and number crunching of expenses, cash flow, revenue, etc.
Armed with the relevant data, you can make informed decisions and create short-term micrometrics to give you a good pulse on the business and the market. Short-term metrics and regular review of the numbers ensure that your business can stay flexible and adapt as economic growth necessitates to survive.
Taking proactive measures now will allow your businesses to weather the storm of slow global economic growth and possibly emerge stronger from this crisis. Employing these four business survival strategies will save your business from experiencing the adverse effects of an economic downturn.
