So many people use the threat of an incoming recession to fear-bait you. They promise that they have the answer (in the form of a product, a free email course, etc.) on how to recession-proof your business. But they’re all about increasing their sales, not giving you useful information.
A digital course, high-ticket program, or 37-step email funnel won’t save your business from suffering the effects of an economic downturn. I’ll tell you what will, though–without you having to join my list or purchase anything from me first! In this episode, I reveal the three areas you need to pay attention to so that your business will be prepared to weather the storm of a recession.
On this episode of Promote Yourself to CEO:
4:38 – Take a look at money management in your business. Here’s why you need to be ahead of the curve on this.
9:02 – How can you prepare for the worst case scenario (clients dropping out like flies and sending you into a sudden cash crunch)?
12:37 – When it comes to investing in your business, it’s important to be very discerning. Here’s what I mean.
15:36 – What’s the biggest culprit behind so many small businesses slowing down during an economic downturn? If you’re especially dependent on referrals, heads up!
22:32 – Don’t be afraid to add this into your marketing. It’ll help make you and your business stand out.
24:09 – What’s the simplest, easiest way to make more sales? I reveal a few things I’m thinking about and implementing on a regular basis in my own business.
29:25 – I went through a lot of stuff in this episode. But I recap what I most want you to take away from it.
Mentioned in Why a Digital Course Won’t Recession-Proof Your Business and What Will Instead
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A digital course is not the answer to recession-proofing your business, neither is a digital product, a high-ticket program, or a 37-step funnel. There are so many people out there preying on the fears that many entrepreneurs and small-business owners have about an upcoming recession. But instead of giving useful, practical advice based on research, they are using this fear to drive sales, and I'm really, really not happy with that.
In today's episode, I want to dig into the three areas you actually need to be paying attention to, to prepare your business for a recession. No, you don't have to buy any course or go through any funnel in order to get this training. Listen in.
Are you ready to grow from solopreneur to CEO? You're in the right place. I'm your host, Racheal Cook. I've spent the last decade helping women entrepreneurs start and scale service-based businesses. If you're serious about building a sustainable business, it's time to put the strategy, systems, and support in place to make it happen. Join me each week for candid conversations about stepping into your role as CEO, the hard lessons learned along the way, and practical profitable strategies to grow a sustainable business without the hustle and burnout.
Hey there, CEO. If you can't tell, I am a little fired up today. I'm a little fired up today because the last few weeks I have been getting all of these ads basically saying this one thing will recession-proof your business, and it makes me so angry. It just makes me angry. I think anytime marketers are using fear as a way to drive sales, especially using fear as a way to say “This is the one thing, this is the secret answer to recession-proof your business,” it is so manipulative and it just makes me so angry.
The reason they're doing it, I understand, is because it gets clicks, it gets eyeballs. This is why all the news cycles right now are talking about the economy. Nothing will tell you more about what drives fear than reading headlines in the news. They are using fear as a way to get traffic to the news, traffic to the news on the TV, news on the Internet, what have you.
There are a lot of marketers who are piggybacking off of the fear of a recession. I'm here to tell you, you don't need to be scared of a recession. Recessions happen. They are part of the normal economic cycle. There's going to be periods of growth where the economy is continuously growing and doing really well. There's going to be periods where the economy slows down. Knowing that it's just part of the cycle of the economy will hopefully help people calm down, get back in control of making real decisions for your business instead of feeling freaked out and making decisions based out of fear.
We do not want to do that. We do not want to run our business in emergency mode, panic mode. It's not how we're going to do this. Today I thought I'd dig into some of the key things to help you prepare for a recession because truly, can you recession-proof your business? No, I don't think that's something anyone can guarantee. Again, I think that language is manipulative. But I do think we can prepare for a recession. We can be smart going into a recession.
Once you understand this, you can go into any economic downturn. This is why my business managed to get through COVID the last few years so well. This is why so many of the business owners I work with are actually thriving on the other side of it because they understand these foundational principles of how to make sure your business can weather any storm. Let's talk about the three areas that I want you to be paying attention to and really thinking through so that your business can weather whatever recession, whatever economic change we are faced with.
The first thing I want to talk about is managing your money in your business. I know a lot of people do not want to hear about this. They don't want to talk about it. They don't want to look at their money. It's time to pay attention. This is one area when things are going really well, when the economy is booming, and people are spending money all over the place, it is easy to generate revenue, it is easy to make sales when the economy is growing.
It's a little bit harder when it is slowing down, when that growth is slowing down. You have to be ahead of the curve with your money because it might take a while for whatever's happening in the economy to impact your business. It may not impact it at all. I mean, maybe you're going to have a business where your clients are still going to spend with you regardless, but it's still good to be prepared. It's good to be smart and ahead of the curve.
Honestly, if you do these things, you will end up with more profits in your pocket because you have been a good steward of the money in your business. The first thing you need to do is take a look at your money. Take a look at all of your revenue coming in. Take a look at all of your expenses. It's time to get really familiar with the numbers.
When we're looking at all the revenue coming in, we really want to pay attention to what your top performing products, programs, or services are. Where are you making the most money in your business? What's the easiest thing for you to deliver? What is the highest profit margin thing for you to deliver?
I think this is something we don't evaluate often enough. There may be products, programs, or services in your business where some are super profitable, and others are less profitable just because they're more expensive to deliver to your clients. Paying attention to this, actually going through and looking at your PnL, looking at what is coming in is going to give you a lot of insight into where you should put your effort, like what offers you should focus on even more.
As we turn into a recession, you want to make sure you're putting out high-profit products, programs, and services. If there's anything that's too expensive for you to deliver, do you need to raise the price point on that? Do you need to reduce the expenses around that? Or do you just need to focus on something else that's more profitable? We're going to review what is actually making the money? What products, programs, and services do you have? What are the most profitable? What do you sell the most of? What is easiest to deliver? That will give you a lot of insight into where we want to put your time and energy to make more revenue.
We also want to look at the expenses, and this is where things can get away from us really quickly. I don't know about you, but I find it so much easier to spend money in my business than to spend personal money. It's crazy, but I'm like, “Hey, there's this new camera that I want for my computer. Yeah, no problem. Oh here's a new mic I want for the podcast. Oh no problem,” and I will buy things for the business really easily because I'm like, “Oh, it's for the business.”
But it can get away from me I think like anybody else, and this is where reviewing your expenses is going to be so important. I like to do this at least on a probably every six-month basis in my business because suddenly these little things start to add up. For me it's one-off purchases that can add up. It can also be those recurring subscriptions. If you have a lot of tools and technology that run behind the scenes of your business, you might find that you're paying for something that another product you are also paying for also does.
I've had this happen to me a couple times where maybe Canva now does something that they didn't do before and so I no longer need to pay for this other thing. It's good to evaluate your expenses because it might seem like it's only $20 or $100, but over the course of a year, that adds up so we want to trim down any unnecessary expenses.
We also want to make sure we have our business reserves set up. Your business reserve is three to six months of business expenses including your paycheck, including what you need to pay yourself that is set aside in a separate account, not your operations account where you're paying your monthly expenses for the business, but set aside in a business savings account or a business money market account so that if something happens and you are in a cash crunch, you can still stay afloat. You can still pay yourself, you can still pay your team, etc.
The worst-case scenario for a business, especially businesses that are doing maybe more high-end boutique services is suddenly you have clients who drop and it takes a massive hit on your revenue. Then you're sitting here wondering, “Can I pay my team? Can I pay myself? Do I just skip paying myself this month?”
No, we plan for this in advance because we cannot control if our clients are going to reevaluate their own scenario, but we can be prepared so that we have three to six months of expenses set aside, we can keep things going, and we can make better decisions because we're not making them from panic. We're making them from a place of “Hey, we prepared for this possibility. Now we have a little bit of a runway to replace that revenue or to go out and get more clients.”
We want to have three to six months of business expenses set aside. That is your business reserves, that is the equivalent of your emergency fund that you have in your personal life, same thing in your business life.
It will also help you to not dip into your personal money. At this point in your business, your business and your personal finances need to be very, very separate. Your business pays you but that money is now yours. It is no longer your business's money. The worst thing that can happen during a recession or downturn is you haven't prepared your business financially for maybe slowed sales, people dropping, or what have you, then now you're funding your business from your personal savings, from your personal retirement fund, or anything like that.
We want to keep these things separate. It is going to make a massive difference for your peace of mind to know that your business is set up to be sustainable without impacting your personal finances. How do we do that? Business reserve account. Don't have that much set aside yet or not sure how you'll get that much set aside? That's when you might want to think about going to whatever your local bank is that you've been working with—usually one that you ever relationship with is going to be the easiest one to do this with—and talk about funding, talk about “Could I get a line of credit? Could I get a small business loan just to have sitting there?”
I like a line of credit because unless you use it, you're not getting charged for it or any interest on anything that you don't use. It just gives such a peace of mind to know that if something happens this month, I don't have to scramble to keep my business moving. I have this buffer, a line of credit gives you that buffer a little bit of peace of mind. That would be something else I would think about when it comes to your money.
The final thing, when it comes to investing in your business, let's talk about this. I think this is where you have to make the best decision for yourself, but I feel like because this whole episode was based on me getting upset, frustrated, and honestly pissed off at all the marketers who are using this recession to do a big money grab, I'm not holding anything back today, I think it's important to be very discerning with where you're going to invest your money in your business as you look ahead.
Now things that I'm always investing in, I'm investing in my team. I'm investing in myself, like the things that I need to show up 100% for my team, my family, my clients, everything. But things that I don't invest in as much anymore especially are going to be all the small little courses, all the small little products that maybe in the past I would have been like, “Oh, I should learn that, no big deal, that's just $500 or a couple $1,000. I'll go ahead and grab that.” I think it becomes really easy over time to have a vault of things you don't get into.
What I do think it makes sense to invest in is real support. By real support I mean, yes, team people who can help you with things, but I'm talking about real support who is there with you helping you see that you're not alone in this, helping you make decisions as you go through any sorts of ups and downs in your business, and who's there to hold space for your growth as you are really navigating a new business landscape.
I have found again and again that whenever things get challenging, and that are outside of my control, having a mastermind group, having a coach, having people I can lean into is always worth it for me. We find again and again in our own community in the CEO Collective, that having a place where they can come and process things, think through things, and really evaluate whether this decision or that decision is the better fit for them, that can be really powerful.
Consider that if you need a community, if you need a support system, that would be a great place to invest your time, your energy, and your money. Because of course, you can find those on your own or you can invest into those types of things. Those are the money-related areas where we're looking at recession-readying our business.
Let's talk about the next two areas, which are marketing and sales. Marketing and sales are really important, of course, I think we all know this. But one of the reasons that businesses struggle during a recession is because they do not have real systems in place for their marketing and for their sales.
To be honest, when the economy is doing really well, it's a lot easier to do marketing and to make sales. It's a lot easier to get clients when the economy is good, when there's a lot of money flowing around, when people are spending more money, when businesses are spending more money, when everything is growing. It's a lot easier to grow right alongside it.
It's a little bit trickier to grow when things are slowing down. The biggest reason so many small businesses slow down and even stop growing, they start shrinking a bit during an economic downturn is usually because they haven't truly had to do marketing and sales, or they haven't had to get very good at them. I see this a lot with my clients who have been building and growing these great businesses, but a lot of the times, they've been able to coast on the marketing and sales front, they've been able to grow these businesses because they have an amazing word-of-mouth, amazing referrals, or clients are always sending new business their way and they're leaning on their networks. They don't really have to “do” marketing because the word-of-mouth has been working enough.
While that is to me an amazing indicator, it tells me that you do a great job for your clients, that they are really happy with working with you and want to share the word about what you're doing, during times of economic uncertainty or economic decline, those things start to get scaled back too. That's something you want to keep in mind. If you have been dependent on referrals, if you have been dependent on word-of-mouth, if you have been dependent on other people talking about your business, but you haven't been proactively marketing yourself, then you might start to see things slow down pretty quickly just because people stopped talking about these things when the economy slows down.
I want you to get more proactive with your marketing. That means going through the five-part process. We talk about this all the time on the podcast. There was a whole series a couple months ago about the different pieces of the marketing puzzle and how to put it together. But I'll just quickly review Attract, Engage, Nurture.
If you have been dependent on word-of-mouth referrals and networking for Attract, I need you to think beyond that and think about how you can be even more visible for your business. How can you be even more visible? Do you need to start putting some partnerships in place? Do you need to go out there and become a speaker or get interviewed more frequently? How can you raise the visibility and add another layer on top of the referrals and the word-of-mouth?
Now the nice thing is once you start doing some additional visibility, especially if you're doing interviews, especially if you're doing guest-teaching, anything where you can showcase your expertise, that actually makes it easier for your existing clients to talk about you because now you've given them something to share. Consider how you can add more attract to your marketing mix.
The next piece—what happens after they find you for the first time with Attract, they heard you in an interview, they saw you on the news, etc—is they have to engage with you. Your potential clients have to now engage with you. If you've been missing this piece of the puzzle, if you don't have anything on your website that makes it easy to start a relationship, whether that is a request for consult, a request for proposal, that could be getting access to a free resource or a training you've created, joining your email list, if you don't have any of those things in play, now is the time to make sure you have made it super easy for people to officially get into your ecosystem and keep hearing about what you have.
If you haven't put in place some process once they sign up for that request for consult or they sign up for your free checklist, you need to have a follow up Nurture sequence that really helps them to understand who you are, what you do, and how you can help them and move them further along the buying process. Now is the time to tighten this up. Otherwise, you're going to have a lot of people who might sign up for all of those things, but then they don't convert on the other side. Now's the time to tighten up that system and make sure that system works really well.
You also want to be thinking about your Nurture process. This is something that becomes such a challenge for so many entrepreneurs and I see people who are on again and off again with nurturing their community. They might send out an email once in a while, they might send out a few things on social media, or they show up all at once and then they disappear for a while. Pick the Nurture platform you want to focus on and then stick to it. Figure out how you can be really consistent.
I would rather you focus on the frequency you can be consistent with compared to trying to show up as much as possible. What I mean by that is if you are somebody who are like, “Man, I have not been consistent in my Nurture marketing. I know I'm not sending out any emails. I know I'm not showing up on social media enough,” it's really easy to go from not doing anything to saying, “Well, I'm going to post on social media five times a week and I'm going to send out a weekly newsletter. I'm going to do all these things,” and then you can't keep up with it.
I would rather you say, “I'm going to post on social media two or three times a week. I'm going to send out a newsletter every other week.” That is better than trying to go all or nothing. Because all or nothing is usually that way because we've set ourselves up to fail. We've put so much pressure on ourselves to put so much out there, and you don't need to, you don't need to do that.
I want you to be thinking about your marketing, one, are you getting enough Attract visibility? If you're getting a lot of referrals, word-of-mouth, depending on your network, how can you add another layer on top of that, so that you have that visibility for your business. Two, do you have your Engage system dialed in? Is there a way for people to enter their name and email to request a consult, to request a proposal, to get information or content from you and then some follow up to really move them closer towards the sale? Then finally, are you showing up and nurturing people? Once they're in your ecosystem, are you continuing to nurture?
The final top secret thing I will share with you when it comes to marketing is do not be afraid to add high touch into your marketing. In fact, I really encourage you to do that right now. When most people zig, I like to zag, and when there's a huge shift towards automation to the point where it starts to feel like you're only communicating with robots, people want to know that there's a real human on the other side of it.
If you haven't had to do a lot of marketing in the past or maybe you're realizing you need to do something to make your marketing stand out, ask yourself “How can I add a layer of connection on top of this?” If you're doing some interviews as a new part of your Attract strategy, how can you connect more with the people who might have heard you do that interview? Could you invite them to get a free consult from you? Could you give them a special bonus if they opt in to your list on this page? How can you add an additional layer of connection?
This is the one thing that I think really helps me stand apart is I'm so driven by relationships, that I end up having interviews and those people hire me. The person who just interviewed me will then come on and hire me or I will have them start to say, “Oh, you need to talk to so and so on beyond their show as well.” Think about how you can add more high touch, high connection. Even though you want to have all these systems in place, it's that personal touch that can really help you stand out.
Now the final part of what I wanted to talk about when it comes to recession, readying your business is sales. Yep, we're going to talk about sales. I think one of the simplest easiest ways to make more sales is to simply be more proactive about it. A lot of the sales training out there has been very much focused on building these automated sales funnels, pushing content, pushing stuff out towards your audience, and not doing things that are a little bit more of a high touch, high connection, proactive way of making sales.
A few things that I think about and that I'm implementing on a regular basis, one is pay attention to the people who are paying attention to you. If you don't know who they are, then go into your email software, go into your social media, pay attention to who's commenting, who's liking, who's clicking links in your emails. Those are the people you should be connecting with more. I will often go through our emails and we set up tags.
For example, if we're doing a promotion for one of our offers, I can see who clicked through to get more insight about that product, program, or service. Then I can reach out to them personally and ask them, “Hey, I saw you checked this out. I would love to answer any questions you have. Would you like to jump on a call?” I can reach out to say, “Hey, tell me more about what your business is up to and what your challenge is here.” I can also do that on social media through doing DMs, etc.
I can start a conversation. That's not the same thing as starting a pitch. It's just starting a conversation. The pitch only comes after I have answered a bunch of questions and feel like they're a good fit. I'll say, “Oh, I think you're a great fit for this.” If they're not, I will tell them, “I don't think this is a great fit. I don't think this is the right time for you.” But it's that being proactive and actually paying attention to who is paying attention to me.
The other thing is to follow up with people. This happens to me so often, I can't even tell you. It definitely helps me see who is on top of their sales pipeline and who is not are the people who actually follow up with me. You would be shocked how many people will pitch me for something, or try to get in front of me to learn about their product, program, or service and they won't follow up at all. They'll send one email and then I'll never hear from them again.
Or even people who I've been on a call with, I've been on a sales call to learn about their product, program, or service. Then for whatever reason, I don't take action right away and they don't follow up with me, they don't check in. This is where most sales are lost. In fact, people who study sales and train sales will tell you that the fortune in the follow up, there's a reason they say that, it's because most sales need at least five follow ups in order to get the sale. That's only going to increase as people are more distracted and have more going on. It's not about being annoying. It's just about being pleasantly persistent.
If you're having sales calls with people, make sure you have a game plan for how you're going to follow up with them. I actually have a swipe file for myself, meaning a copy-and-paste templates of the different emails and direct messages I would send to somebody at different stages of follow up depending on if they took action or didn't. This just helps me to stay, again, pleasantly persistent because I know like me, they're busy. They have full lives. They have a lot going on. It is up to me to make sure that if this is something they were interested in, that I'm following up enough that it doesn't get dropped off the radar.
Now what if people say, “Now's not a good time,” whatever? Great, that's awesome. That's fine. In fact, a lot of people who don't buy from you right now, it is legit, because it's not a great time. There's something going on. I hate sales coaches who just are like “That's just an excuse, blah, blah, blah.” Sometimes it is an excuse. I get that, but sometimes it's a legit reason for people, sometimes they have life, families, and other priorities. It just isn't the right time. That's fine.
Your responsibility though is to just dig a little bit into that. “Tell me about what's going on right now. What would be the best time to follow up with you again?” If it's a legit reason, then they'll come back and tell you. If they're saying, “Hey, I'm getting married this fall. I just know that I don't have the bandwidth to do this as well. I prefer to start at the beginning of the year,” then I will say, “Great. I'm so excited for you. Sounds so amazing. Can I follow up with you at the end of December, beginning of January?”
I'll go ahead and make a note in my tracking spreadsheet because of course, I have a tracking spreadsheet to follow up with them then and also make a note to myself “getting married” so that I can pay attention to their social media and congratulate them when that happens. These are the little things, little personal touches that go so far with people.
We're going to wrap this up. I feel like I went through a lot of different things here. But I really want you to take away that the answer to a recession is not to jump into a whole new business model. The answer to a recession is not to think that creating something new is the answer. It often is not. It's taking what you have and optimizing it.
This is why I get so frustrated and so many small businesses don't get past the $100,000 mark because they keep starting over and they keep starting over because they believe this fear-based marketing out there that they have to completely change what they're doing in order for their business to grow or in order for their business to scale. That is just not true. You can scale just about any type of business model. You can have the business that you want.
We're going to talk more about how to make sure you're aligned to the business you want next week. But I really wanted to give you some super practical action steps to take away and think about as we're moving into this season where we're not 100% sure, and we're never 100% sure how things might change. All we can do is prepare for the worst and hope for the best. That motto has done really well for me over the last 15 years.
I hope you enjoyed this episode. I hope if anything, you start taking some notes and go get these things handled, handle your money. Get on top of your marketing, be someone who pays attention to the people who pay attention to them and your sales and you will get through this with ease. In fact, it will probably go really well for you because people will pay attention when you take great care of them.
Thank you so much for listening. If you liked this episode, make sure you head over to Instagram, tag me @racheal.cook. I want to hear your thoughts and ideas on this one. Of course the full show notes and all these action steps are at theceocollective.com.