We’ve been hearing and talking recession rhetoric for months. And by “we,” I mean the collective we: business leaders, media, economists, and the world.
Regardless of whether there will be a recession or whether we’re already in a recession, the economy is showing signs of slowing down, or, as The Economist put it, “reality has caught up with rhetoric.”
Yet many who predict a recession for 2023 do so lightly. In Tom Standage’s “Top 10 Trends for 2023,” he predicts that “most economies will go into a recession …. but America’s recession should be relatively mild.” Morgan Stanley said that the US may skirt a recession entirely. Even Goldman Sachs now sees a slimmer chance of a recession than previously predicted.
But when the news headlines blaze with Jeff Bezos warning consumers to spend less, claiming, “things are slowing down,” most of us sit up and take notice. After all, Bezos is in the business of selling us … well … everything, including those large-screen TVs he just told us not to buy.
Here’s the Problem:
You don’t have time to wait for all the pundits to agree and tell us we’re in a recession. By the time there’s consensus among the world’s brainiacs and billionaires, it’ll be obvious.
The real question is, what can we do about the uncertainty of it all – now?
The good news: Regardless of whether we’re already in a recession, or whether there will be a recession, or whether there won’t be a recession, or whether there will be a hard landing or a soft landing, for business planning purposes you can still find your focus for growth for 2023, regardless of the economic climate. Here are four tips that will help power boost your business planning for the upcoming year:
1. Don’t Let the News Dictate Your Moves
Some of today’s most successful companies started during a recession: Mailchimp, Uber, Airbnb, Slack, Warby Parker, Venmo, and many more.
Nate Bailey, President and Founder of Ideation, a distributor based in Portland, OR, started his career in the industry during a recession. Because of that timing, Nate was given a gift: grit, tenacity, hunger, ingenuity and mostly, heedless optimism. It worked. In 2022 Ideation was honored as one of Inc. 5000’s fastest-growing companies. (Nate will join us on stage at skucon in Las Vegas for a fireside chat about his experience).
As headlines of layoffs, wage freezes, and hiring freezes creep into your feed, live by this edict: “Don’t let news dictate your moves.”
At skucamp in Brooklyn in September, three of the industry’s largest suppliers joined Catherine Graham, commonsku’s co-founder and CEO, on stage to discuss the state of the industry now and their perspective on the future. The panel featured David Nicholson, vice chairman at PCNA; Dan Pantano, president and CEO at alphabroder Prime; and Jonathan Isaacson, chairman and CEO at Gemline.
During the interview, Jonathan Isaacson said, “There will be industries that continue to do exceedingly well even in a downturn … in every downturn, there are industries that do really well and there are parts of businesses who do very well. During Covid, who bought? HR. Who didn’t buy as much? Sales and marketing. So, if you are selling to a trucking company and they can’t find truckers, what are they doing? They are turning to us to solve a problem. So the people who are going to do well during whatever time comes are the people who understand that we’re not selling products, we’re solving problems. And that’s true on the supplier side and that’s true on the distributor side: there’s always opportunity out there.”
Treat news headlines as suggestions, not commands. Yes, Jeff Bezos might be the richest man in the world but remember that when he speaks publicly on a major news network, he is speaking to his first audience (and perhaps his only audience): his investors.
“There’s always opportunity out there.”
2. Focus on Industries
To Jonathan’s point: Many industries will thrive during an economic downturn.
Forbes recently published an article that detailed which industries you should invest in during a potential recession. We can take our cues from this list on which industries to target as either clients to grow in 2023 or prospects to approach. The Forbes list included healthcare, basic consumer goods, utilities, discount retailers (like Walmart and Costco), alcohol, maintenance and repair services, accounting and payroll services, and transportation. Other experts cited industries like self-care or small indulgences like candy, beer, wine and the pet industry. The Bureau of Labor Statistics cited that during the 2007-2009 recession, the four industries that performed well were healthcare, government, tech, and education.
This is incredible news for our industry, because according to PPAI, the top 10 industries that buy promo are healthcare, business services, retail, financial, manufacturing, education, food and beverage, tech, not-for-profit and construction.
Compare the lists of those who thrive in a recession and promo’s top buyers by industry, and you end up with seven out of 10. In other words, we’re already positioned to work with most of the industries that fare well during hard times. Recession or not, focusing on these industries is simply a solid strategy for your business planning for 2023.
Action step: Tighten your 2023 focus on clients who are in industries that do well during hard times, create a prospect list of those same industries, and focus on solving problems.
3. Keep Top Talent and Keep Hiring Top Talent
The war for talent will not wane. Job growth might slow but talented people can now work from anywhere, and are more motivated to work for companies whose values, culture and mission align with their personal passion.
The idea to follow suit with wholesale layoffs is tempting, but Stephen Mihm from Bloomberg suggested that all of these “Mass Layoffs in Big Tech Are an Old-Guard Mistake,” citing a study that looked back over more than three decades and found that CEOs “who pursued a strategy of mass layoffs were far more likely to end up receiving their own pink slip for their bungled efforts.”
Bains, the global management consulting firm, put it this way: “Think of a recession as a sharp curve on an auto racetrack (which is the best place to pass competitors, but requires more skill than straightaways). The best drivers apply the brakes just ahead of the curve (they take out excess costs), they turn hard toward the apex of the curve (identify the short list of projects that will form the next business model), and accelerate hard out of the curve (spend and hire before markets have rebounded).”
In our interview at skucamp, Jonathan Isaacson talked about it in terms of control: focusing on what we can control and what we can’t and he zeroed in on our most important asset, people:
“I only really worry about one thing because there’s only one thing we can control, which is the quality of the people that we hire. Everything else comes out of the quality of the people in the organization … Our ability to win or lose is going to singularly hang on our ability to hire the right people in the organization. You screw that up, everything goes to hell. We get it right, we win.”
Action step: Review your team. Analyze your strengths and weaknesses. Review your pay structures and comp plans. Be open-minded to the fact that top talent may be more easily acquired during lean times than robust times and mostly, be prepared to hire when others hide. Recession or not, recruiting, hiring and keeping top talent is a solid business strategy.
4. Plan for Growth — Substantial Growth
You have likely heard of the Post vs. Kellogg’s story cited in a famous New Yorker article titled “Hanging Tough,” quote: “When the Depression hit, no one knew what would happen to consumer demand. Post did the predictable thing: It reined in expenses and cut back on advertising. But Kellogg doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies. By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty percent and it had become what it remains today: the industry’s dominant player.”
“Fortune favors the bold” is a mantra our CEO often repeats. Study after study shows that those who invest more in marketing and in their business, grow during tough times for one simple reason, you become a survivalist, a pirate, a challenger brand. To quote the New Yorker article again, “Recessions create more opportunity for challengers, not less. When everyone is advertising …. It’s hard to separate yourself from the pack.” The article points out the difference between “sinking the boat” (wrecking the company by making a bad bet) or “missing the boat” (letting a great opportunity pass). Recessions can be a great opportunity to race ahead of the competition, possibly leading the pack for years to come.
Action step: Invest, invest, invest. Invest in marketing. Invest in your people. Invest in tech. Invest in your team’s continual education. Invest in yourself. When others pump the brakes — push on and pass by.
Uncertainty Is the New Norm. Embrace It
As a worldwide pandemic descended on us in 2020, many of us thought it was the beginning of the end. But instead, you thrived. And our industry, the branded merch medium itself, elevated its importance for brands. We were all —suddenly and rightfully— thrust into solving client problems through product. Our industry matured during the most difficult season of our lifetime. If there’s one lesson we collectively learned, it’s that the only thing we know for sure is that uncertainty is our new normal.
We might be in a recession. Or there might yet be a recession, next month, next year, next week.
But it doesn’t have to be your recession.
This article was originally published in commonsku and was made available through a reciprocal content partnership with Promo Marketing. commonsku is the work-from-anywhere platform that powers your connected workflow enabling you to process more orders and dramatically grow your sales. To learn more or to begin your free trial now, visit commonsku.com.
