Experiencing challenges isn’t new to running a business, but the gravity and unexpectedness of a crisis can result in significant consequences.
To illustrate, the world was shaken by the coronavirus pandemic in 2019. It was a crisis that acted as a wake-up call for most business owners. Many companies had to make tough calls if they wanted to stay in the game. Scale-ups and SMEs became especially vulnerable. Whether they already had a thriving momentum or had achieved the top of their growth stage, it was a given that many businesses would not have the financial stability to survive a crisis such as this.
Given the challenges in a crisis, is growth even possible?
Businesses come from different contexts and circumstances, but it’s natural for business owners to want to both protect their business and grow it if that is at all possible.
The decisions made from here on out are crucial to the possibility of business growth. But before anything, it’s important that you take another look at your business’ key metrics of growth by using tools such as Ansoff’s box:
- Market Penetration
- Product Development
- Market Development
Focusing on employing one or a mix of these metrics is vital to sustaining business growth. Although, sticking to how you were doing it before the crisis is unlikely to be enough because, essentially, crises change the dynamics of your business.
To formulate a strong growth strategy during and after a crisis, you have to continuously assess your growth metrics and see if you are still meeting your growth objectives.
While doing so, there are factors that you should take into consideration to ensure that you are still pursuing the right metrics and strategies.
Here are 4 factors to consider when planning growth strategies during a crisis:
1. Customers have new needs and new priorities
Crises can create chaos and disorder so city or county authorities usually step up and direct the situation. They make decisions on what the public should be concerned about, how they should continue with their lives, and the new policies and regulations that the public and private companies have to follow.
With this mass mindset shift of the public, new needs and priorities surfaced. While this may be a challenge for businesses that don’t adapt to the times, they can look at it as an opportunity to finally explore new horizons.
To give an example, during the COVID-19 pandemic, there was a massive demand for face masks because it was considered essential by not only health institutions, but also the general public. Companies saw the opportunity to cope in the crisis by satisfying the demand using targeted growth metrics.
For instance, clothing and fashion brands were able to maximise product development by extending their line to reusable cloth face masks. Companies already selling face masks, on the other hand, were able to use strategies integrating both market penetration and market development given that more and more people could be labeled as their customers.
2. Many people will have decreased purchasing power
A crisis will always have a negative impact on the economy. People could lose jobs, employers could potentially cut employees’ hours to compensate for losses, and some businesses may be forced to close operations.
Because of this, the purchasing power of people changes. Businesses then have to take a look again at their products and services and ask if they are still relevant or a viable option for their consumers. They also need to consider how they can do that with their own financial and operational struggles in mind.
Is there a more appropriate strategy that will fit the current market’s purchasing power? Or are there ways to make the products and services more budget-friendly? Reviewing your market penetration and product development metrics help identify your position in your current market and how you can develop a strategy to improve it.
3. Consumer behaviour changes during and after crisis
Lifestyle adjustments are expected after a crisis. The way people act and think are influenced by what they learned from experiencing a crisis. Hence, their buying habits could also change.
If we take the COVID-19 pandemic again as an example, almost everyone transitioned to the digital sphere. Seeing how almost anything can be done online, businesses are pressured to deliver on its inherent efficiency and convenience. Customers expect that you can serve them even if you are not physically at their store. And if a customer can’t find you online to begin with, then they will most likely look for alternatives.
Furthermore, lots of people are working remotely or spending time at home, so this can shape new eating habits, media consumption, product usage, and others.
Businesses who seek to plan for growth even in the middle of a crisis would be able to do so if they remain top of mind in their market. In this case, they can prioritise market penetration or product development by adjusting to the market’s new buying habits that shifted online and boosting presence in social media and e-commerce channels.
Diversification, wherein the business would enter a new market with new products altogether, is another option for some. Non-essential businesses, particularly, can consider this in order to stay relevant.
4. Competition may be stiffer
Even if various businesses closed down or experienced stagnation in their growth during a crisis, business owners should not feel complacent. It doesn’t necessarily mean they have less competition. In fact, even during the height of the COVID-19 crisis, some SMEs have found creative and strategic ways to thrive. Additionally, after months, people slowly recovered and found success in scaling-up their businesses with due consideration to the “new normal”
So while you may be thinking of ways to plan for the growth of your own business in these adverse times, your competition is most likely doing the same, too.
Constant vigilance is key as you plan your business growth strategies. You have to stay on top of trends, customer wants and needs, and even the ever-changing events that could further affect your business and the sector you belong to. You also need to be aware of what your competitors are doing. What products are they launching? What strategies are they focusing on?
From gaining insights about this, you can make smarter decisions and moves. If you notice competitors focusing on product development, you may consider joining in the race or take advantage of capturing the market with a different strategy instead.
Moreover, understanding the competitive landscape can let you look into market development or diversification. Is your target market now more saturated with competition? Maybe you can look into new segments and excel there while your other competitors scramble to fight among the same pool of customers.
What’s next for your business?
As complicated as it may be to navigate through a crisis, it doesn’t have to be a roadblock in your desire to grow. You just need to have a fresher perspective on the way things work during a crisis to formulate the right call. These factors allow you to do that because you’ll get to put more value in whichever metrics of growth you pursue.
It’s also important to regularly review your metrics. Are you doing well? Are you meeting the objectives set? If not, it may be time to go back to the drawing board and re-strategise.
If you haven’t done this recently then formally revising your business strategy for the future will give you confidence in your choices. It’s very common for businesses to be reactive in times of crisis and not take the necessary time to work “on” their business. Using diagnostic tools such as a Scale-up Growth Diagnostic can provide a quick sanity check. Also using business strategy tools such as SWOT and MOST will help you to create or revise your business strategy. If it all seems too much or you just need help to find your future direction you can seek help from advisors who have experienced significant crises in the past.