It's no secret that we've been in strange economic times. The last several years have presented unprecedented challenges to businesses, especially small, midsized, and local ones. Of course, there are ways to navigate economic challenges, and some are more effective than others. Let's consider some problems and solutions to these issues.
Challenges Facing Businesses in 2023
As the U.S. economy has walked the line between stagnation and recession, two problems have consistently plagued businesses: low consumer spending and a labor shortage.
Low Consumer Spending
As inflationary pressures have continued to reduce buying power in the U.S., consumers have responded with lackluster spending. At the same time, rising interest rates intended to fight inflation are also discouraging people from making large purchases due to the increased cost of borrowing.
According to the U.S. Chamber of Commerce, there are about 10 million job openings, while only six million individuals are unemployed. If everyone wanting a job found suitable work tomorrow, there would still be four million unfilled jobs. While there have been many theories floated to explain this mismatch - from early retirements to young male workforce non-participation, the only thing clear is that the labor shortage in the U.S. economy is likely to take time to remedy.
Solutions for Economic Challenges in 2023
Generally, there are only a few options available for small businesses in a recessionary economic environment, most of which are undesirable, to say the least. Three common choices in a recession are to reduce costs, reduce prices, improve marketing, or some combination of the three.
Reducing costs is easier said than done. And given that the lion's share of most companies' budgets are taken up with employee wages and benefits, this is often the most unpopular option. Factor in that there is a large labor shortage, and reducing or stagnating salaries is highly untenable. At the same time, some other costs like gas to fuel work vehicles are not under your control.
The next possibility that comes up is lowering prices. Since there are only so many costs you can lower, you may turn to lowering prices or running sales to keep your employees busy. And this may work for a while. But more than likely, your competitors will be thinking the same thing, and you will find yourself in an unsustainable race to the bottom. You, as the business owner, are taking the hit.
Marketing & Branding
The third option is to get serious about branding and create a solid marketing plan. Rather than get backed into a corner by lowering prices or cutting staff or benefits, clear branding for your business with a committed marketing plan can safeguard your company from the worst of an economic slowdown. In fact, it's possible to grow even when the overall business climate is poor.
Branding Your Business
People don't buy features; they buy feelings. That's one of the central points of the BrandsFormation system that Zimmer Marketing uses. Put into practice, it means that to brand your business, you need to be telling your potential customers a story that speaks to the heart. By telling your customers a compelling story about your business, including what motivates you and makes you distinct from your competitors, you can build trust that will lead to first-time and return customers coming to you for years. Even in economic downturns, if people believe your business will take care of their needs, they won't take their business down the street to save a buck.
Learn More About BrandsFormation
Learn More About BrandsFormation