How To Keep Your Business Profitable During A Client Drought

Business cycles come and go. But in tumultuous times, knee-jerk reactions aren’t the ideal business strategy. Instead, you need a proactive approach—including a fallback plan—that’s developed months (if not years) before a recession happens. I’ve observed countless businesses navigate these turbulent waters, and it’s become clear that preparedness is the ultimate differentiator.

Drought periods aren’t desirable, but they are survivable with a solid system in place. Preparing in advance not only increases your company’s chances of emerging stronger on the other side, but it also helps you navigate uncertainty with greater control and less chaos.

When sales dry up, panicking could lead to haphazard decisions with longer-term consequences like employee turnover or damaged client relationships. A thorough, pre-planned strategy, however, increases your company’s resiliency and ability to pivot, ensuring it can grow again once economic droughts are over. Here are some tips to keep in mind.

Have An Emergency Budget

When businesses falter, common culprits often include poor marketing, a lack of market insight or even venturing into new territory too soon. However, a primary lesson from tough times consistently points to one critical oversight: insufficient capital. Many entrepreneurs underestimate the time it takes to turn a profit, the reserves needed to weather economic storms or even potential increases in operating costs that can quickly deplete initial capital.

Sales may be slower than initially expected, costs might rise faster than anticipated and slow periods could stretch longer than forecasted. This is why planning for financial emergencies isn’t just a smart precaution—it’s an absolute must. Develop a robust contingency budget, detailing exactly how you’ll set aside enough capital to carry your company through a rough patch. This foresight can be the difference between just surviving and truly thriving on the other side of an economic downturn.

Keep Generating Leads

When sales are in a slump, marketing budgets are usually first on the chopping block. The C-suite tends to view marketing as a “nice-to-have” set of activities, believing that trimming these expenses won’t impact the company’s main engine. This line of thinking is similar to reducing takeout spending to cover a mortgage—a philosophy that works for personal budgets, but can severely backfire in business.

While you may not have the budget for million-dollar Super Bowl ads, marketing shouldn’t take a backseat during a client drought. You still need a robust plan for generating leads when a recession hits. Even if your efforts don’t immediately translate into impressive new client numbers, consistent marketing could reap significant rewards down the line.

During these times, focus on lower-cost lead generation and marketing activities. Think email campaigns, valuable digital content and small-scale events such as lunch-and-learns or educational presentations. Participating in community gatherings sponsored by local chambers of commerce or industry leaders may also be highly effective. Strategies like these—especially when coupled with consistent follow-up communication—can pave the way for future sales success.

Diversify Sources Of Income

When a product reaches its peak, advertising messages often shift to encourage audiences toward alternative uses. This strategic move can slow, or even prevent, a decline in demand. For instance, educating customers about various ways to use a baking mix—traditionally only for pancakes—may open new markets.

Sometimes, market research even uncovers unexpected product uses that companies could later capitalize on. Leveraging product lifecycles by revamping existing items helps businesses diversify, though not all products will fit this strategy.

Another effective way to diversify your income sources is to avoid putting all your eggs in one basket. Discovering opportunities to introduce service or product bundles can be particularly helpful when sales are drying up. Look closely at what existing customers are saying. What needs are your current offerings missing that you could easily meet by augmenting what’s already there? You don’t always have to allocate a ton of resources to new product development to diversify effectively.

Focus On Relationships

While customers might be trimming their budgets during a recession, they’re still allocating their dollars somewhere—usually to essentials and businesses they trust. Keeping those relationships alive helps strengthen a company’s resilience during a drought.

You don’t want to be overly pushy, but find ways to maintain communications and offer incentives. Recognize existing clients’ loyalty while acknowledging that they, too, are feeling the financial squeeze. Do more than highlight the value of your products and services; find ways to add to that value.

This could involve extended financing with lower or zero interest rates during a promotional period, or perhaps smaller gifts added to an existing loyalty program. You might also offer exclusive access to helpful content and educational resources. Whatever you can do without overextending your resources may sow the seeds for continued business.

Maintaining Profitability

Expecting sales to remain consistently steady is akin to projecting the stock market will never experience losses. Ups and downs are an inherent part of natural business cycles, and these fluctuations should be actively planned for. Keeping a cool head during turbulent times becomes significantly easier when you have solid contingencies in place. Emergency budgets, low-cost lead generation, income diversification and strengthening existing client relationships are crucial strategies to avoid slipping into the red. By implementing these proactive measures, your business’s bottom line will undoubtedly thank you.