How much is an economic downturn really going to impact my business revenue?

How much is an economic downturn really going to impact my business revenue?

How will the impact of an economic downturn affect my business revenue?

To understand the true potential impact of an economic downturn on your business start from the outside in by assessing how your customers will be impacted and how they might behave. Until you have a good grasp of the impact on customer requirements and demand you don’t know what changes to make internally.

Involving your various customer facing teams, sales, marketing and senior managers ask:

To what extent will each of your different target markets be impacted?

For each segment ask:

How will customers in each market behave?

Will they swap to a cheaper model/option in your range?

Will they purchase the same product or service but less frequently?

Will they seek to buy a cheaper lower quality version from a competitor?

Will they jump to a substitute product or service?

How loyal are our customers likely to be?

What features or benefits you offer might be more important to them now?

What are the current needs of your customers?

How can you help your customer meet those needs?

How might this impact current distribution channels?

Speed of delivery, cost of delivery, delivery frequencies

Will new distribution channels emerge?

Which, if any customers are likely to increase their business in an economic downturn?

Will your customer continue offering the service or product you are supplying for?

What about their customers? And their customers if you’re part of a supply chain?

How, if you worked together, could you and your customers better serve the end users?


How will your competitors behave?

    • Will they reduce prices to maintain sales volume?
    • Will they include additional features in the base price?
    • Will they offer revised financing options or longer credit terms to win more business?
    • Will they bring forward the launch of new offerings?
    • Are any of their features and benefits suddenly more relevant to your customers?
    • Will they merge or seek alliances with other competitors?
    • Will they work with customers to reengineer their products to meet new requirements?
    • Are they all strong enough to survive?


Do you have new products and services in the pipeline?

    • Are there new products and services being developed that are particularly relevant to current conditions?
    • Is it better to rush through new products and services or stick to existing timeframes?
    • Is it better to cease all development of new products and services and focus all efforts on existing portfolio?


What does your sales and marketing team need to do today in order to minimise the impact?

    • Identify your most profitable products, services and customers
    • Identify unprofitable products, services and customers
    • Identify customers that are most likely to thrive in a recession
    • Identify products and services that you could cross sell and upsell
    • Identify products and services that can easily be adapted to provide greater value
    • Identify products and services that could easily be stripped back to offer a basic version whilst keeping margins
    • Identify products and services that with little or no alteration have the potential to be repositioned
    • Identify non discount incentives that could help flame sales
    • Identify in conjunction with finance, opportunities for early pay discounts
    • Identify in conjunction with finance, opportunities for extending credit terms to qualifying customers
    • Identify with finance, customers most at risk and ensure account payments are up-to-date
    • Identify the potential implications of any volume changes for your production capacity
    • Communicate regularly and consistently to internal teams honestly and without hyperbole
    • Identify your key sales and marketing talent and ensure you continue to motivate and develop high-performers
    • Review existing sales and marketing commission and bonus structures to ensure they don’t conflict with your revised strategies
    • Review your management information systems and develop focused reporting and effective forecasting. Uncertain markets will require shorter timeframes and more structured reporting
    • Increase transparency and communication with all internal touchpoints
    • Plan carefully thought out communication with customers to alleviate any concerns they may have
    • Contact all key customers early and at senior as well as user level
    • Ensure messages are regular and consistent


Given the volatility which exists when markets are in flux, it makes sense to model the worst- and best-case potential scenarios to see the impact an economic downturn might have on your business.

When you have considered the alternative scenarios, you may face, review your strengths and weaknesses in relation to both the opportunities and threats. Then you can determine what actions to take and how to prepare.

In uncertain times the businesses that do best are those who react rapidly from a base of knowledge.

Once you have defined your new strategy, share it with management and drive it. Make your key people accountable for targets which are consistent with your revised strategy and measure progress regularly.



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