How To Recession-Proof Your Business In The Next 90 Days

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As a small business owner, you wear many hats. You're the owner, you're the marketer, you're the seller, you're the hire. I remember in the early days I was doing pretty much everything. I was writing, I was bookkeeping, I was selling, I was marketing. I was doing a lot, but lucky for you, you have LinkedIn. They have the tools to help you boost your visibility, find prospective customers, and find the best team for your small business all in one place. So while LinkedIn can hang up all of your hats, it makes it easier to wear them all. Learn more at LinkedIn.com/MBAShow. The TV pundits are saying that we're not technically in a recession. Please, if you've been to the grocery store, you know we're in a recession. And if you're a business owner right now, you know it's definitely a recession. Leads are slower. Customers are hesitating. Deals that used to take a week are taking a month. Right now you have a 90-day window before things get a lot worse. Businesses that come out of recession stronger are not the ones that get lucky. They're the ones who go on the offense, that don't play scared. Two of my most successful multimillion-dollar businesses were built out of a recession, and one of them went through two recessions, and it still changed my financial life forever. Today, I'm going to show you exactly how I did it. And I'll also share with you the truth about the lessons I learned the hard way and what it cost me in the process. At least I get to share those lessons with you today. Welcome back to the $100 MBA Show. I'm your host, Omar Zenhom, where I deliver practical business lessons 3 times a week, Monday, Wednesday, and Friday to help you start, grow, and scale your business. If this show has helped in any way, it would be amazing if you could drop us a quick review on whatever app you're using to listen to this podcast right now. It helps me and my team bring new episodes every week, and more importantly, more entrepreneurs will be able to discover our podcast so you can help someone else start their journey. Thanks so much. When COVID hit in 2020, Webinar Ninja, the software company that Nicole and I built, back in 2014, we started in 2014. It exploded in 2020 because of COVID right? Overnight everyone needed webinars, businesses, schools, yoga studios, gyms. We had karate instructors running classes through our platform because their studio was closed because of the lockdowns. We had churches running funerals via webinar because people couldn't go to church anymore. Now, as sad as that situation is, our company and our numbers looked incredible, right? Signups skyrocketed, revenue went up, growth charts were off the charts and in the right direction. And for a moment I thought we caught a wave. We did, but it was the wrong wave because lockdowns ended and the world opened up and those customers left. It was not because the product was bad. It's because webinars were not how they actually wanted to run their business. The pandemic forced them to do it. And the moment they didn't have to do it anymore, they can do their karate classes in person and run their events in the church and all that kind of stuff. And everything was back to normal. They didn't need webinars anymore. So we saw a dip. It wasn't a catastrophic dip, but it taught me a big lesson. Growth that comes from external circumstances rather than genuine product-market fit is not real growth. It's just borrowed time. It's just like getting money from the government. It's temporary. And then when the circumstances change, the customers will leave with that change. The businesses that are genuinely recession-proof are not the ones that rode the wave. They are the ones that are built on something customers cannot live without. It's that simple. That distinction between what people want and what people need is the entire game. And I smile because it took me so long to get this. And once I got it, everything got easier. So let's start with talking about the biggest mistake business owners make in a recession and how you can avoid it. Let me tell you what most business owners do when a recession hits or looks like it's coming, right? They buckle down, they get nervous, their palms get sweaty, they cut expenses, they tighten the belt. They tell themselves they just need to absorb it like it's a wave, right? A wave coming crashing down. If I just can absorb the wave, everything will be fine. Everything is going to be calm very soon. And they stop moving forward. I understand why. When things are uncertain, the instinct is to protect what you have, right? It's also instinctual for a lot of people to not do anything. Like, hey, let's just not do anything. Let's not, you know, change anything, because if we don't do anything, you know, we don't add another factor we have to worry about. So what they do is they hold cash, they cut costs, they reduce exposure, right? And that makes sense. It makes perfectly logical sense. It feels responsible, right? But here's the problem with playing defense in a recession. Defense does not grow your business. Defense does not win you new customers. Defense does not deepen the relationship that will determine whether your customers stay or leave when they're starting to cut their own expenses. Because again, everybody's in a recession. Defense at best keeps you alive, but it won't win you the game. In a recession, the businesses that become irrelevant are the ones that disappear. You have to be on the offense. The right move, the move that separates businesses that are stronger after a recession, and I've done it, are the ones that don't just survive. They go on the offense, they go aggressive, they put the pedal to the metal. And now is the time to do it before it gets worse. So what do you do? What does a recession-proof business actually look like? First, I want to say that recession-proofing is not a set of tactics. It's a fundamental quality of your business. This is key here. So listen up. Does your customer need you or do they just want you? Listen, you don't have to be in the life-saving business. It's statistically proven that most people, when they're cutting costs, the last thing they cut is Netflix. Do you actually need Netflix? No, you can entertain yourself in other ways. There's TV that's free, you have YouTube, you have other streaming things that are free, but the customer still needs Netflix because it gives them a good level of enjoyment, an enough level of enjoyment and entertainment that makes it a valuable product. Whether you like it or not, you need to be entertained, you need downtime, you need a way to maybe forget the hard day you had. So ask yourself, does your customer actually need you, or do they just want you? Is it just a nice to have? There's a massive difference here. When things start to get cut from a budget, from a business's budget, from a family's budget, there's certain things that stay and there's some things that leave. I'm going to give you a good example. If you run a gym and your gym is kind of one of those like, we're for everybody gym, right? If you have never worked out in your life, we're not intimidating, you can come and work out. When things get tight and people need to start cutting subscriptions, your customer base, the base that you are targeting in this type of gym, will cut your membership because they don't take the gym seriously. It's not a need for them. They can go for a walk, they can go for a jog, they can do some push-ups if they actually want to do some workout. And most of them won't even do that because exercise is really not a priority. They're paying whatever, $19 a month, and they go to the gym maybe 3 times a year. Now, if your gym, for example, was targeting serious athletes or people that take health and wellness seriously, whether they're in their 30s, 40s, 50s, they're taking the supplements, they're, you know, measuring their macros and all that kind of stuff. They're not going to cancel their gym membership. It's a part of their identity going to the gym. If you're running a business, there are key tools I can't cancel. Okay. My accounting software, Xero, right? We use Xero. It's a membership every single month. I'm not canceling this thing. I can't stop running payroll. I can't stop paying my bills. I can't stop. You know, having bookkeeping, my project management tool, the software that we run, we use Basecamp, right? Our team runs on this tool. This is how we communicate. Even if I cut all the costs in the world I can, I'm not cutting that. This is how we work. I need Basecamp. I need Xero. So you need to be honest with yourself right now. Where does your business sit in the spectrum of your customer's life? Is it a need or Or is it a want? Think about for a second, how hard would it be for your customer to cancel? What are they losing out? How hard would it be for them to switch to a competitor? We're going to talk about building a moat so that you're protected. But is your business a need or a want? If you are a want and not a need, the next 90 days is the time to become a need. Here's how. I just mentioned it, build a moat. Okay. The single most important thing you can do in the next 90 days is build a moat around your best customers. Okay. You know what a moat is? It's that, you know, bit of water in front of the castle to stop people from, you know, intruding, from taking over the castle. We're not talking about acquiring new customers. We're talking about protecting the ones you have. In a recession, every one of your competitors is going to start competing more aggressively from the same pool of customers. Why? Because I told you, in a recession, the smart players go on the offense. What are you going to see from your customers? Well, they're going to start dropping their prices. They're going to start making bigger promises to their customers, and you're going to start seeing some desperation. It'll be visible. Your competitors are going to start approaching your customers, and your job is to make switching to the competitor not worth it. Here's what building a moat actually looks like in practice. Increase the switching cost. The more you embed your product or service in how your customer runs their business, the harder it is for them to replace you. I gave you an example with Basecamp, our project management tool, how we communicate with our team is through Basecamp. That's a tool we use every single day. Our team, every morning when they open up their computers, it's the first thing they go to, is where they work, it's where they communicate, it's where all the data lives, where all the chat history is, it's where all the decisions are made. So leaving this tool is not just a financial decision, right? Maybe the company's gonna save some money, but they're not gonna save time and productivity because it's gonna cost them a lot to get the whole team to move this heavy ship to a different direction, another different thing. It's really hard and it's just, it's just painful even just thinking about switching off. It's a disruption. It's a project. And honestly, it's a risk. This makes it harder for people to leave a product like that. Make yourself harder to leave by becoming a more central part of how your customer operates or lives. If it's a B2C, uh, business to customer. So one of the ways we did this with our webinar software, Webinar Ninja, is we built integrations, deep integrations, custom workflows, things that work for the business, for the business we're serving. So for example, when people signed up for a webinar, we integrated with their email marketing software so they get added to their email list. Redoing that integration and that flow is a lot of work. We had built-in email follow-up sequences when after the webinar was over and they wanted to send an offer or the replay. That's all done. Having to migrate all that work to another software is a lot of work. So build a moat around your business. Is Bitcoin complicated or do people just think it is? 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You need the total solutions advantage from Comcast Business. It's a first-ever combination of the largest, fastest fiber-powered network, gig speeds with equipment and security included, plus a 5-year price lock. Learn more, get started for $60 a month for 12 months when you add an advanced solution to a qualifying internet package. Limited time offer, restrictions apply, new customers only, requires 300 Mbps internet, Security Edge, and additional qualifying service. 1-year agreement, paperless billing, and autopay with bank account required, taxes and fees extra. Next, increase the relationship. Recession reveals the difference between vendors and partners. You want to be a partner with your customers. A vendor just sends an invoice, pay this, right? A partner is someone who calls and asks how things are going. How can we do better? Are there any other problems we can solve for you? You want to be proactive as much as possible. Show up for your customers. When I was in a recession multiple times with my business, I ran a monthly webinar with all my customers. I had an open webinar that all the customers can come. We had 30,000 users. They can come ask me questions, get the most out of the software or demo new features. So they'll be like, oh wow, I didn't know you can do that. It increased the value of the product in their mind because they're like, wow, not only am I getting all these new features, but I also have this awesome webinar I can go to every month and ask questions and get things solved. Notice I'm not selling anything to them, right? I'm not, I'm not upselling them to the next product. No, I am just deepening our relationship. I'm adding more value to the equation. I'm asking what's hard for them right now. I want to know what they need that they're not getting right now. And what are they feeling pressure from, right? What is really keeping them up at night? Those conversations will tell you so much about how to serve your customers better in the next 12 months. It's worth more than any market research you could buy. And guess what? Your customers will remember that you reached out to them, right? Whether it's a one-on-one call or a webinar or an email, people notice. Next, leave enough value on the table that cutting you is painful. This is why I gave that Netflix example in the beginning, because Netflix, you know, for all intents and purposes, in terms of our needs to survive, Netflix is not a need, but it's actually a pretty good way to fulfill our need to be entertained. Okay. There's so much value on the table, meaning that you get so much for what you're paying for. It's really hard to cancel. And in my opinion, this is the most important concept, the most important concept to build your moat. Your customer needs to feel that every single month they're getting significantly more than what they're paying for. Why is this important? This is important because every single month, if you have a recurring business, every single month or every single year, you have to win over your customer. You're reselling the product because they can cancel any time. So if they constantly feel like they're not getting ripped off, in fact, you feel like they feel like they're getting a steal, like this is a great deal, then you have the ability to be the last thing they cancel. You're not just fair value, you're obvious, you're undeniable. It's hard to replace the value that you offer. If they ever sit down and they look at their expenses in their business or their life, the conversations just sound like this: "We can't cut this product. It's essential." When you experience this, that feeling is not an accident. It's engineered through consistency of overdelivery. You want to be consistently overdelivering. You want to be communicating this value. You want to make sure that they are actually using and benefiting from everything that you provide. So build a moat right now before they start cutting costs. I'm gonna give you an example of this. When we were running member webinars every single month, one of the questions I asked in the chat was, hey, uh, why are you running more webinars? Why aren't you using the software more often? And a lot of people say, I just don't have the time. I get nervous when it's live. And those answers allowed us to build a feature that was revolutionary at the time, which was automated webinars. So we said, hey, We have a new type of webinar you can run that solves that problem. You don't need to be there. You just shoot it once and people can watch your webinar anytime. In fact, you can turn an old live webinar into an automated webinar right now in 2 seconds. Let me show you. Let's get to part 2 of today's lesson, and that is pricing. And this is the move that most business owners get wrong, completely wrong in a recession. They cut prices. They think, hey, customers are just tending to spend less. So if I lower my prices, I'll keep more of my customers. Seems logical, right? Do not do this. Cutting your prices in a recession is one of the most damaging things you can do to your business and your brand. And here's why. When you cut prices, you signal one of two things to your customers, either that your prices were too high to begin with, which destroys trust and makes them feel like they got ripped off, or you are desperate. Both are disastrous. Because if you look desperate, you destroy confidence in your business and your brand. And desperation can be smelt a mile away. You don't want any of those two to be a part of your business. And here's the practical reality. Everyone's prices are going up during a recession. Inflation is real. Costs are rising. Suppliers are charging more. And customers know this. They see it around them. They see it when they go to the grocery store. They see it in the gas prices when they go to the pump. They see prices going up. This is an opportunity for you. So when you come to them and you say to them, hey, we know times are tough and this is why we are not raising our prices, we're holding our prices the way they are. You become remarkable. You become somebody who cares. That is loyalty in action. It's a differentiator. And guess what? The person that gets in front of it and says, hey, we're not going to raise our prices like everybody else is doing, you're top of mind. You're the last one they're going to cut. This lands strong with customers. I've done it many times. For customers who want security, who want to feel like, okay, the next year I don't have to worry about this price going up. You kind of answer that question in their head. Will all my prices go up in my business? All my products going up? If you go and say, hey, hey, we're not going to raise prices this year because we know times are tough. In fact, lock in an annual subscription, lock in a long-term deal, and you're going to get this special bonus price, which is the bonus price for an annual deal anyway before the recession. So the point here is that both people win. Your customers get peace of mind that you won't hike up things on them, but you also get a long-term commitment that gives you cash up front. Hey, if this episode's giving you a plan and lowering your anxiety, I want you to subscribe to the show because you're going to get better and better every time you listen to a new episode. In fact, we have an episode that I'm working on right now that I can't wait to share with you. It's called "I Read 50 Books a Year" because I do. Many of them are just absolute flops. And I share with you the ones that you only need to read. These are the ones that are actually going to help you become successful. So you don't need to read 50 books a year. There are less than a dozen books that I recommend that will change everything for you, and I'll share with you in an upcoming episode. Hit subscribe so you don't miss it. Part 3 of today's lesson is to remind you that when you're in a recession, which we are, that you are in wartime. Okay? I'm talking directly to you right now who is listening, who's watching. You are a business owner and you're in a recession and about to get into a very dark time in the economy. Revenue might be down. Customers might have left. You are not sure what the next month is going to look like. I get it. You're scared. But what I want you to hear from me is that this is wartime. Not metaphorically. Literally. You're fighting a war. Your business is under attack from forces outside your control. Economic conditions, customer confidence, tightening budgets, all the stuff that are not in your realm of influence. You're in a fight and in a fight, waiting is losing. Peace will come. Recessions will end. The economy always recovers. But will you make it? And the businesses that survive are the ones that don't wait patiently for that to happen. They're the ones that fight for every customer, every dollar, every relationship during the hardest months they're ever going to see. This is what fighting looks like, because I've been there and I get butterflies in my stomach just thinking about it, just sharing this with you, because those are the days that made me who I am today. This is what it looks like. You take massive action on your existing customer base. You pick up the phone, you talk to them, right? You send that email, you run that webinar. I was talking to customers constantly, more than it feels comfortable, More than it feels necessary, I asked them what they needed, what they're going through, what's hard. I asked them what would make the next 6 months more manageable for them. I gotta tell you, I've spoken to over 1,000 customers in my career. I can't remember one time somebody not willing to tell me the answers to those questions. They are so appreciative that somebody's even asking these questions, let alone the founder of a company. And guess what? Through those answers, they're going to give you your product roadmap. They're going to give you your next service offering. They're going to give you your retention strategy, right? All through a conversation. The businesses that thrive in recessions are not the ones with the cleverest marketing or big-time strategy. No, they're the ones that have deep customer relationships. Those relationships are built through contact, consistency, genuinely valuable relationships. And when you reach out to your customers, when you're accessible, when you actually genuinely care about their wellbeing and their survival as a business or their livelihood or whatever it might be, the way you're serving them, they will not forget it. Not only now in the recession, but later in the future when things are great. Here's a gem that you don't want to miss. Every recession creates new problems, new urgencies. New things businesses are desperate to solve that did not exist 6 months ago. Where do you think Uber Eats came from? Uber Eats came out of the need of needing to get food when they couldn't leave the house during COVID The businesses that come out ahead are the ones that identify the new problems early. They build solutions for those problems and they become at the top of their game because they're early. So ask yourself, what does my customer need right now? That they did not need before the recession? That question is worth more than any marketing budget. Now, I'm not against cutting the fat, but I'm against cutting the muscle. There is a version of cutting expenses that is smart and a version that can really hurt your business. This is what smart looks like. Cut the things that are not generating value, subscriptions that nobody uses, ad spend that is not converting, events that are not actually building real relationships. Catastrophic cuts, cuts that really ruin your business, are the cuts that make your product better. You don't want to cut those things. You don't want to cut things that are serving your customers. You don't want to cut things that are investments in relationships with your customers, right? That's keeping you alive. In wartime, you cut the things that don't contribute to the fight. Protect those things that do help you win that fight, win that war. Before I go, I want to give you the plan for the next 90 days. So it's super clear. Number 1, build the moat. Call the best customers you have right now, and you can do this easily by just going to Stripe and looking at your top customers. We did this at Webinar Ninja. We looked at our top 100 customers and we called them because we wanna know what they look like, what they do, so we can get more of those people. Never cut your prices, hold them. That's the value. They're gonna love you for that. And if you publicize that, you can't just not change your prices and not say anything about it. You have to actually email your customers, tell them, hey, we're not raising prices. We're keeping them the way they are because we know times are tough. In fact, you can also offer them long-term deals to give your customer that security that they can lock in this price for a longer period of time. This gives you upcoming revenue, gives you cash on hand that you can invest in. Go on the offense, take massive action, speak to your customers consistently and constantly. Give new solutions to new problems that are coming from your customers. A recession is not a wave to survive. A recession is a wave that you ride to victory. The businesses that make it on the other side are the ones that use this time to become something their customers genuinely cannot live without. Start building that business right now. You got the next 90 days, go for it. You got a plan now. We're here for you. So if this episode gave you the plan you're looking for and helped you and you're ready to go for it, subscribe to the show. Not only as a thank you to us, but also because there are more episodes we have in our feed that you cannot miss that's gonna help you. There's an episode we recently published called 10 Low-Cost Purchases Under $200 That Changed My Business. So you don't have to spend a lot to make a big difference in your business. Go check it out. Thanks for being a part of today's episode. Thanks for making it to the end. You're my kind of person. You're a completionist. You're a doer. I love it. I'll check you in the next one. If you found today's episode helpful and you want more practical business lessons to help you start, grow, and scale your business, the best thing you could do is subscribe to this podcast. Hit subscribe or follow on your favorite podcast app, the one that you're using right now, whether it's Apple or Spotify or wherever you listen to podcasts. By hitting subscribe, you get our next episode automatically, and it's the best way to support the show. It's absolutely free, and it's a way for you to commit to growing your business. And now that you subscribed, I'll check you in the next episode.

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