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Key Takeaways
- 28% of business owners believe ChatGPT might help keep their business running in a recession.
- In the event of a recession, almost 1 in 3 business owners say they can only afford to be closed for less than 30 days.
- 61% of business owners who experienced a period of economic uncertainty ended up pivoting their business. The most effective pivot overall was shifting focus to a different product or service.
- Female business owners were 62% more likely than male owners to increase marketing and advertising efforts in preparation for a recession.
Keeping It Close
Over the past few months, the global economy has faced uncertainty, causing many to worry about a possible recession. Business owners are especially vulnerable during financial downturns, so many are taking steps to prepare for the worst.
We recently surveyed over 700 business owners to gain insight into how they’ve been planning for a recession. What strategies and technologies are they using? Which pivots have helped them survive in the past? In this guide, we’ll examine business owners’ experiences and gather advice on preparing your business for tough times.
Liquidity in the Flood
There are many strategies for staying afloat during economic crises, but they all share a common truth: the sooner you begin preparing, the greater your chance of success. Let’s see what strategies business owners have already implemented to prepare for a possible recession.
According to our survey findings, the No 1. way to prepare for a recession is to cut costs and expenses where possible, with 62% of business owners having already done so. Another 47% built up cash reserves or emergency funds, and 29% streamlined processes.
Business owners also prepared for tough times by changing up their services and how they marketed them. Just under one-third of owners have diversified their product or service offerings, and almost one-quarter increased marketing and advertising efforts. Female business owners were 62% more likely than male owners to prepare for hardship by increasing marketing and advertising efforts.
Should a recession force temporary closures, 1 in 3 business owners and 1 in 4 small and medium-business owners said they could only afford to stay closed for less than 30 days. Clearly, there is no time to waste, so we recommend that business owners make changes now to weather any incoming storm.
Learning to Float
Adapting to the market is often necessary to succeed during a recession. Here are the top ways business owners have made it through tough times in the past.
Most business owners who went through a period of economic uncertainty (61%) ended up pivoting their business. When asked about their most successful pivot, 22% of respondents said they shifted their focus to a different product or service, while 21% moved their business online or improved their online presence. Other successful pivots included diversifying revenue streams (15%) and adjusting price or payment models (14%).
Owners of business-to-business companies reported the following top pivots:
- Moving the business online or improving online presence.
- Shifting focus to a different product or service.
- Forming new partnerships or collaborations.
Based on these responses, adaptability and innovation may be key for businesses hoping to survive economic uncertainty. Reflecting on her experience during the COVID-19 slowdown, a female business owner in wholesale and retail advised, “Be innovative. Don’t settle for ideas that worked in the past. To deal with challenging times, you need to be creative and keep people invested.”
AI, Automation, and Adaptability
With artificial intelligence (AI) becoming part of our daily lives, many businesses are hurrying to adopt new technology. But with so many tech tools available, it can be difficult to weed through and find the most useful ones. We asked business owners about the tech tools they’re already using to help their businesses thrive.
Despite the abundance of cutting-edge apps and software, the most crucial tech tools for business owners were tried-and-true classics. Google Drive was the most essential tool for 51% of business owners, followed by Zoom (39%), QuickBooks (31%), and Dropbox (22%). However, business owners still embraced new technology. Almost one-third reported using AI to automate routine tasks, and 28% believed ChatGPT could help keep their business running in the event of a recession.
Automating tasks using AI was very effective for business owners, saving businesses an average of $4,053 since beginning automation. Notably, half of the business owners automated accounting and bookkeeping tasks, saving an average of $4,950 since doing so. Social media management was automated by 48% of respondents, saving them about $3,900, and more than 1 in 3 respondents automated marketing tasks to save over $4,800.
Human resources tasks were the least reported automation among respondents, but business owners could reap major benefits from it. Automating tasks like payroll and employee onboarding saved those we surveyed almost $6,000.
Preparation Is Key
As the economy remains unpredictable, many business owners have already begun preparing for the worst-case scenario. All those surveyed had key insights into staying afloat during hard times, whether it was something small like increasing online presence or something drastic like pivoting the entire business. Business owners may want to consider diversifying their offerings, increasing their marketing efforts, and implementing cost-saving measures through automation. No matter which strategies may be best for your business, start implementing them as soon as possible to reap the most benefit and endure tough times.
Methodology
B2B Reviews surveyed 708 business owners on their preparedness for a possible recession. Of these, 210 were classified as “seasoned” business owners, and 498 were first-time business owners; 494 of the business owners surveyed had experienced a period of financial struggle as a business owner, and 214 had not. Among business owners, 336 were female, 353 were male, 18 were nonbinary, and 1 chose not to disclose their gender.
Micro businesses had 1-9 employees, small-to-medium businesses had 10-250 employees, and large businesses had 250 employees or more. The counts of respondents in each category were as follows:
- Micro: 595
- Small-to-medium: 109
- Large: 4
About B2B Reviews
B2B Reviews is a software review and recommendation service that empowers small and medium-sized business decision-makers with free tools and expert insight.
Fair Use Statement
Concerned about a possible recession? Feel free to share these findings for noncommercial purposes, but please provide a link back to this page in order to credit the creators and give readers access to our full findings and methodology.