During the COVID pandemic, the global economy has faced unprecedented friction and transformation. While this created economic headwinds across a number of industries and sectors, it also created vast opportunities for innovation and disruptions. Sometimes, it was the lean, agile startups and mid-size companies who were able to capitalize faster than the industry giants.
In fact, many entrepreneurs have been unfazed by the challenges (or at least pivoted quickly to adapt). It’s proven for founders and small businesses that with the right strategies and positioning, businesses can increase their growth even as everything seems to be unraveling around them.
Taking advantage of the various opportunities that this new market offers doesn’t have to be difficult. All it requires is a basic understanding of some simple new principles.
Charles Gaudet is the CEO of Predictable Profits, one of the leading business coaching firms for entrepreneurs and small businesses. Gaudet saw firsthand how he was able to help many of his own clients not only navigate the inflection points of the past two years, but actually achieve record levels of growth. He discussed these new economic challenges in an interview while also offering guidance to up-and-coming entrepreneurs as they navigate these uncharted waters.
What are the most significant economic headwinds that entrepreneurs should be aware of right now that could impact their business?
Charles Gaudet: You could argue that the economy is overheated, inflation is rising, supply chain issues are suffocating production, and increased labor costs are reducing margin.
Yet a hidden cancer is impacting entrepreneurs even more — commoditization. The lack of differentiation is forcing businesses to compete on price during a time when costs keep rising.
As a result, you must establish a unique advantage, so you direct the focus from price to the value of doing business with you. Using price as a competitive advantage is a losing battle.
If a slowdown occurs, how can small businesses have a plan in place to mitigate the impact?
CG: During 2020, we witnessed consumers taking cost-cutting measures. They immediately eliminated “nice-to-have” products and services. They then narrowed down their “must-have” options and sought cheaper alternatives.
The items they continued to pay for were those that delivered the most value to their businesses and lives.
To mitigate the impact of a down economy, you must answer a few questions that emphasize the value of your product and service over the cost:
- How can we help our clients achieve an even better result faster while increasing convenience and reducing risk?
- What needs to happen for us to be the most expensive competitor in the industry and still have buyers lining up to do business with us?
- Why is buying from us one of the smartest decisions people can make right now?
Every business (B2B or B2C) should answer these critical questions in a way that best addresses what’s most important to their ideal client.
How should one's scaling strategy change in an up economy versus a down economy?
CG: At Predictable Profits, we discovered that the methodology for creating sustainable and scalable growth is the same, regardless of the economy. It’s a three-step process:
However, as the economy transitions, consumer needs change. Therefore, you must adapt by making one of four decisions:
- Change the target market to match the existing message.
- Change the existing message to match the target market.
- Change both the target market and the existing message.
- Do nothing and hope for the best.
It’s important to recognize that a down economy isn’t a “bad economy.” It’s just a different economy that requires you to adapt to match evolving needs.
Are there any unique opportunities that you believe the current economic climate offers?
CG: The biggest opportunity today is to adapt to the buyer's journey by optimizing for consumption (not conversion). In other words, you look for your ideal buyers to consume as much content as possible.
The benefit is that today’s consumers spend more time doing research before making a purchase. In fact, a Google report found that “COVID-19 has accelerated online shopping and research around the world.” Today’s buyers are researchers. They are evaluating you and your competitors, as well as alternatives and whether it’s worth purchasing in the first place.
And we found that consumption drives conversion.
Given consumers’ fondness for research, you should provide the information they need in the form of articles, videos, research, surveys, etc. The more of your content someone consumes, the more likely they are to buy from you.
These days, opportunities to stay in front of consumers are abundant through retargeting, social selling, and email marketing.
Consumption Drives Conversion
As you face the bold new world of the post-COVID market, remember that you can best reach new customers by seeking a new audience. Many people are searching for new ways to learn more about the products and services they consume. In being their educator, you can become their provider.
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