7 Actionable strategies that can help you navigate economic uncertainties and keep your business thriving

BY SIMONE J. SMITH

Starting a business is no easy task. It is a journey of self-belief, risks, and endless learning, but, as an African-Caribbean entrepreneur in North America, it’s even more. You see, you are not just building a business, you are challenging systemic barriers, shattering stereotypes, and creating opportunities in spaces where representation is often limited.

Individuals who are part of racialized groups are business owners, which may come with unique challenges. In fact, during the fourth quarter of 2023, 19.4% of private sector businesses were majority-owned by racialized individuals. While all businesses in Canada have been affected by the COVID-19 pandemic and are facing levels of inflation not seen since the 1980s, businesses majority-owned by racialized individuals face additional challenges above and beyond those felt by all businesses.

African-Caribbean business owners were more likely to be pessimistic in their future business outlook over the next 12 months: one-quarter (25.7%) reported being either somewhat pessimistic, or very pessimistic, while one-fifth (21.4%) of all private sector businesses reported the same.

A component in the pessimistic future outlook could lie in the fact that nearly half (48.4%) expect a decrease in profitability over the next three months, a notably higher rate compared to the 37.7% of all private sector businesses that expect the same. These expectations were little changed from the previous quarter for African-Caribbean businesses (50.2%) and slightly increased for all private sector businesses (34.7%).

Surprisingly, half (50.3%) of African-Caribbean business owners expect an increase in operating expenses over the next three months, compared with around two-fifths (42.0%) of private sector businesses that expect the same.

Additionally, over two-fifths (43.8%) of African-Caribbean businesses expect to see a decrease in their cash reserves over the next three months, compared with over one-third (35.1%) of all private sector businesses.

So, what do we do with this information? How do we navigate the current economic crisis as business owners in Canada? In the following section, we will discuss seven actionable strategies that can help you navigate economic uncertainties and keep your business thriving, even during the most turbulent times.

Cut Unnecessary Costs

The most common strategy adopted by business owners who survived the Great Recession was to cut unnecessary costs. While keeping a team intact where possible is a priority, many business owners reduced headcount, trimmed the number of hours worked, or gave essential staff furlough days in lieu of layoffs. What can you do to cut some costs in your business?

• Managing inventory and payables
• Not purchasing new equipment
• Only buying what you need to get by for thirty days
• Paying essential vendors

Many business owners reduced their advertising costs, and, where possible, eliminated their rent by going fully remote.

Offer Discounts

Another way to maintain your clients and keep your business afloat is to offer free, or discounted services during challenging economic times. It is a great way to grow your customer base.

Stay Young at Heart

The average age of companies that increased revenue during the Great Recession was three times lower than that of companies that suffered significant loss in revenue over the same period. One hypothesis is that younger companies are often leaner and more agile than their more established counterparts.

Be Nimble

You must have a willingness to adapt, put ego aside, and pivot where necessary. This proved to be a successful strategy for many companies (18% of all respondents) that survived and prospered in the Great Recession.

Create Strategic Partnerships

Of the companies that pursued strategic partnerships as a way of staying afloat, nearly all (88%) saw revenue either increase or stay the same. Strategic partnerships allow you to share ideas, collaborate, and strategize with your collaborative partners. Like they say, two heads are better than one, especially when you must figure out how to navigate an issue.

Pick A Winning Strategy Based on Your Business

There were two very clear and distinct approaches taken by business owners to survive the recession:

• Aggressive, ‘promotional’ companies with the means and extra cash to do so took full advantage of changing market conditions by expanding, buying competitors, pivoting, or developing strategic partnerships.
• Other companies with less wiggle room, perhaps as a result of already low margins, focused on minimizing downside risk by cutting costs, pivoting, or digging into their emergency cash stash to keep operations afloat.

Communication Is Key

Companies that grew during the Great Recession placed a lot of focus on communication and transparency with their teams. Of the respondents that expressly mentioned the importance of communicating with employees, 80% saw revenues grow during the recession, sometimes tremendously. We know that in any relationship, communication is extremely important. Letting your team know what is going on can open up discussions on what can be done to deal with current issues and allows everyone to start making decisions that are necessary for themselves. If restructuring is going to happen, it is better to give people a heads up, so that they can do what they need to do to get themselves prepared for any changes.

As a business owner, you can never be too prepared.