How to Grow Your Services Business in a Recession

In the past few years, many boutique firms have popped up to provide specialized services. By narrowing in on a niche, these firms have been able to break away from much larger competitors and offer something new.

While business is starting to climb out of the brink of death, 2021 still brings a lot of uncertainty to the table. COVID-19 has made a significant impact on the economy and continues to have a substantial effect on business. Buyers feel nervous and might feel the need to bring work in-house rather than outsource.

With a mix of economic uncertainty and expanded choices, businesses need to focus on excellent service in 2021. When so many are holding their breath, how you treat your customers is the one thing you can control.

Of course, customer service doesn't make your company recession-proof. While you're thinking about providing an unparalleled customer experience, you need to think of the tactical ways to make your business more agile and able to roll with the punches. The key to growing your business in the years ahead is to be as nimble as possible and quickly respond to industry changes, keeping your customer base healthy.

Keep Your Business Nimble

When business is scaling, and revenue is going up, your expenses usually go up too. Running a large, complex business means that you'll need to spend more to keep it going. However, with that said, being happy with your bottom line can often blind you to your overspending. And, while you don't want to fire someone for going over this month's ad budget, your goal should be to keep spending in check.

Fixed Costs & Variable Costs

There are two types of costs you'll want to keep your eye on, fixed and variable costs. Variable costs change in proportion to sales and are associated with how much it cost to create your product. As you review your costs - you'll want to keep your eyes on both fixed and variable as they have an enormous impact on your business in different ways. If business booms along, finding ways to keep variable costs down means more money in your pocket after every single sale. If things start to drop off, you'll wish you had the cushion of a bigger margin.

However, fixed costs are probably more critical for a services business to monitor. Keeping your fixed costs down means that you aren't on the hook for an excessive amount if the company suddenly drops off. You don't need to run your business like a bare-bones operation, but you do want to make sure your fixed costs are manageable, even in slow months.

Monitor Financial Reports Regularly

If 2021 has you feeling unsteady about your business finances, the hands-down most crucial thing to do is to get in a regular rhythm of reviewing your financial reports now. When analyzing your company's health, there are no more powerful tools than your profit and loss statement and balance sheet.

These reports will help you to understand how you did over the last recorded period and how your business stands overall. Your financial statements yield countless metrics you can analyze; you'll want to pay close attention to the following.

1. Current Ratio 
   The current ratio shows your ability to pay off current liabilities while measuring your ability to use your existing assets. It’s a substantial measure of how liquid your company is and how quickly you can pay off short-term debts if push comes to shove.

2. Cash Runway 
   Your cash runway gives you a better view of your finances, mainly if you are operating at a loss. The goal behind this metric is to show you how long you can operate before the cash runs dry. If your business is seasonal or feels economic downturns acutely, you'll want to keep this metric in mind and review it.

Grow Your Revenue

If half of the equation is keeping costs down, the second half is about earning more revenue overall. Put together; you’ve got a recipe for success and stability, no matter what lies ahead. Piece of cake, right?

If it were easy to make more revenue, everyone would be doing it. But we’ve got ideas for you to try that will put you on the road to more revenue for your business.

1. Serve Your Current Customers More
   Bringing new business to your company isn't cheap. So before start dreaming up your next marketing campaign, consider ways to upsell current clients. Your existing clients provide a wealth of opportunities to boost your revenue without the high customer acquisition costs.

2. Figure Out Your Differentiators
   Business owners don't always want to slow down and talk about branding, but knowing what makes your business stand out can go a long way towards scaling. If you are in the service industry, you face steep competition as the sector grows more each year. Trends show firms are moving from a general approach to a more niche approach. Are you representing a niche? Do your sales and marketing materials reflect that niche? If not, consider updating your materials to let customers know you're different.

3. Form Strategic Partnerships
   Strategic partnerships begin with trust. Start to network with those in your industry and look for those opportunities where referral can flow both ways. Trust will need to be built that you'll provide excellent service before they sent clients your way, but that trust is a two-way street as you look to send referrals as well.

4. Stay Ahead of Changes in the Industry
   The reasons why you need to stay up-to-date on technology, industry trends, and client demands are many. Chief among them is that rolling with the punches of a changing industry will allow you to serve your customers longer and serve many customers overall.

So no matter what 2021 brings, we hope you’ll feel confident to make the changes needed to rebound your company and grow.