business team looking at graphs

Recession Proof Ecommerce Business 

Executives are growing more concerned that we are in the wake of another recession. While experts warn it may not be inevitable, the increase in costs seems to not be going anywhere given the continuous war tensions overseas and supply chains that are still deeply disrupted by the effects of Covid-19. Yet “The State of the CIO report found that 59% of CIOs are planning to spend more in 2022 than they did in 2021”. So what are the CIOs prioritizing? 

According to the Info-Tech Research Group, who conducted the CIO Priorities 2022 research, CIOs named business process improvement initiatives, cybersecurity, supply chain management, and supporting revenue growth/recovery as all high priorities.

As an ecommerce executive or business owner, allocating resources to technology during times of financial uncertainty can feel risky or even like the wrong move. However, many who don’t prioritize the technology end up facing more hardship later down the road with longer onboarding times, latent adoption by your team, and even revenue loss. 

Luckily, there are several ways you can start prioritizing your budget to prepare, protect, and prevent recession effects in your ecommerce business. 

Identify what is costing more 

The cost of goods and services has dramatically increased. In fact, since March we saw a 8.5% increase in cost, the fastest increase we have seen since the 1940s here in the United States. 

  1. This already has put substantial pressure on business owners to increase their employee wages to make them livable. In turn, many businesses have had to reduce their labor forces because of all the other increasing costs in manufacturing and transportation of products. 
  2. There is no escaping that social media ad spend has become increasingly more expensive in the last few years as well. Due to global marketing implications reducing or even annexing the ability to track customer data, social media has become more expensive to run ad’s and see ROI on. 
  3. The United States has begun to “open” back up after Covid-19 restrictions, more people are spending less time online and thus not spending as much as they once were in the height of the pandemic. 

As a business owner these are known facts, and even struggles, that you are faced with daily. It can be difficult to discern what change management needs to occur in order to move your business forward with confidence and stability in these uncertain times. That is why we advocate for having a prepare, protect and prevention plan. 

Prepare, Protect, Prevent 

It can be difficult to discern what change management needs to occur in order to move your business forward with confidence and stability. In times of uncertainty, it can be even more difficult to hold onto your long tail visions as the day-to-day tasks become more and more complicated. 

Having a prepare, protect and prevention plan will not only give you some sanity back but will also give your team a guiding north star to fall back on. It doesn’t hurt to have an exit strategy as well! 

So what is a prepare, protect and prevention plan? It is whatever you decide will prepare your team for making a pivot, protect your business from closure and prevent extreme revenue loss so that you can maintain a brand not just a business for years to come. 

Pivoting your business model or even product lines can seem scary but may be necessary in times of economic upheaval. It’s best to talk about potential business development opportunities or pivots frequently with your executive team. Not only will it help everyone stay grounded in the event you need to act on a pivot plan, it will also help identify new growth opportunities before they are necessary. Lastly, by talking ahead of time about potential pivots and growth opportunities, your organization can test and validate those pivot plans so you aren’t left wondering if it will work. 

Protecting your business from closure is more than preventing extreme revenue loss. Protecting your business also is investing in technologies, your team culture, and your customers. Businesses rarely shut down because one day they lost all the money; it’s normally a slow decline over time. The decline usually starts internally with team culture and bleeds out to your customer experiences. When business owners and executives lack attention to investing in their technologies they will in turn see resistance and even leaner tenatures of their top talent. 

Preventing extreme revenue loss doesn’t sound like rocket science, and many business owners still don’t know how much they spend on subscriptions or marketing every month. Small things add up and it’s important to have transparency on not only your financials but your customer data as well. Outside of tracking external expenditures, data can give you the transparency you need to start predicting inventory needs based what your customer interactions. 

Pivoting, protecting and preventing may still not be enough to save your business and sometimes the struggles are too much to bear to continue pushing through. That is where having a well articulated and documented exit strategy will be helpful.  

Your Exit

We never want to see a business close their doors, however we know it’s part of the natural life cycle of ecommerce growth. That is why we advocate for our clients to have an exit strategy. This means looking at potential options for selling, financing, or even what next personal moves you may need to make in order to safely move the next chapter for your business. We encourage our clients to look at what their drivers are both in business and personal life, to guide what strategy is best for them. Sometimes a merger and acquisition allows your business to remain while sometimes loans are better options. This is extremely personal to you and is advised you connect with a consultant or financial advisor for your exact options are open to you. 

Recessions can be scary, and they don’t have to be

Recessions can be scary and they don’t have to be with a prepare, protect and prevention plan and an exit strategy. By allocating resources to technology during times of financial uncertainty, you are not only investing in your infrastructure for potential ROI in an exit strategy , you are also investing in your team’s productivity and happiness. When your team is productive and happy, the likelihood of better customer experiences increases which can help turn your bottom line around.