10 Tips to Recession-Proof Your Online Business

A variety of events have threatened the Canadian and global economy lately, from the pandemic to trade agreements, sanctions, wars, and bank closures. The resulting economic spiral has left many people scrambling to secure an income, while businesses desperately try to remain profitable.

Many online businesses continue to be profitable during a recession, but no business is entirely recession-proof. You don’t have to be a victim of a recession, but you do have to manage it. Trying to hibernate through it certainly won’t help.

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“You can’t just sit back and take a recession passively,” writes Victor Cheng in The Recession-Proof Business. “You have to be proactive, deliberately seek out opportunities, and adapt to new circumstances.”

How to Recession Proof Your Online Business

Keep the following tips in mind as you operate your online business during (or in preparation for) a recession:

1. Know your audience and give them what they need or want right now. It could be very different from what they needed or wanted in a more stable economy. Consumers are focused on what they need during times of uncertainty, but they still want other things. If you can find a way to let them fulfill their needs and maybe even get what they want, you’ll continue to make sales during a recession and beyond. If you don’t have a profile of your ideal customer, read How to Find Info for Your Online Customer Profile (Avatar/Persona).

2. Optimize the online customer pathway for maximum profitability. Nobody can afford to lose a sale to something that could have been fixed or optimized, especially in a challenging economy. The online user experience (UX) can increase or decrease sales, which is why we focus heavily on website functionality and optimum performance. To maximize profitability, we shift our focus to revenue objectives and the most efficient path to them.

3. Cash flow is as critical in online retail as it is offline. Clear stale stock (or avoid inventory altogether with drop shipping).  If you can’t move stagnate products at breakeven prices, put them to work as loss leaders to bring shoppers to your website. Read These Digital Discounts Do Double Duty to Maximize Online Sales for more ideas.

4. Examine your requirements closely to see if you must hire an employee for the job or if you can use a freelancer. Freelancers can look more expensive based on hourly wages, but it soon becomes apparent that unnecessary staffing will cost you much more in the long run. Any service that can be done remotely online is offered by freelancers. However, I suggest you be extra careful when selecting a freelancer online. We see the best results if we ask colleagues for recommendations, which you can do in local business groups if you don’t know many people who work with freelancers.

You can also hire companies to help with temporary or infrequent jobs. This option can be situationally preferable to hiring individual freelancers for a number of reasons, such as security, availability, fluctuating requirements, or quick access to additional services. Sometimes, it’s just more feasible to let a company handle part of your business so you don’t have to hire staff or acquire expertise. For example, many businesses use third-party logistics companies for order fulfillment because doing it in-house requires staff, facilities and training that make it impractical. A 3PL company can also handle global operations, receive shipments, and do Amazon prep.

5. Constantly review expenses to keep your business as lean as possible, spending only on what is necessary and profitable. That said, make sure you look at the big picture before making a cut. For example, marketing and virtual assistant (VA) services don’t cost you money, they make you money. They should only look like an expense on your balance sheet. If not, try to find ways to trim the expense rather than eliminating it entirely. For example, you can spend less on testing new ad copy and stick with what you know works.

6. Maintain an emergency fund that will cover a minimum of six months of expenses. If necessary, you can feed it slowly until you reach the desired amount. As a bonus, it will reduce the pressure on you so you can focus on keeping your business stable.

7. Diversify your income sources with services, digital products, freelancing, affiliate marketing or a side hustle that is separate from your primary business. Diversifying also allows you to fund one part of your business with another. For example, you can use affiliate marketing on your website and then use those funds to advertise your own products on social media. Read 9 Recession-Proof Online Businesses to Start From Home for inspiration.

8. Watch for the new opportunities that every recession brings and be ready to pivot if necessary.

9. Find recession proof products within your target market, or expand to include recession proof categories. Some categories that I’ve personally seen thrive online during a recession, are sustainable (used) fashion, up-cycled goods, health & fitness, self-improvement, home office, and premium pet care. Additionally, anything that can be done at home rather than paying to have it done, such as gym equipment, meals, and hair cuts.

10. Don’t panic and make irrational, reactive decisions.

“This economic crisis…can feel challenging and terrifying,” says Global Recession: The Insights You Need from Harvard Business Review. “But the current environment can be an ambitious time for entrepreneurs to launch the startup of their dreams.”

Do You Have to Reduce Prices In A Recession?

Price becomes more important as inflation tests the limits of consumer budgets, but it’s far from the only way to be competitive. Know your ideal buyer; be aware of what’s most important to them and help them find solutions to their problems.

“Shoppers aren’t just aware of the price tag. Environmental, social, and governance concerns influence about half of global consumers,” states the Shopify 2023 Commerce Trends Report. “Buyers want to support more ethical businesses with more sustainable supply chains-even though consistency in freight, distribution, and especially fulfillment are nearly impossible for many businesses to control. That’s why product shortages motivate nearly half of all brand switching: 46% of consumers move to competitors who have the products they want in stock.”

Spending continues during a recession, but people are more selective about what they spend their money on. You’ll have to figure out what your target market is still purchasing and offer the most value for their dollar. That doesn’t necessarily mean the lowest price. You can have bonus offers, a loyalty program, or just a better shopping experience overall. Their mindset may be different, but sales psychology doesn’t change.

If you’re just beginning to navigate your way through digital entrepreneurship or want to learn more about how to diversify your online income sources, check out our book:

Recession-Proof Online Businesses to Start from Home book

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Is your online business struggling to grow and remain profitable during these tough economic times? Or do you have any tips to share with other digital entrepreneurs to help them recession-proof their business? Please share your thoughts or questions in the comments below, or join us in the Online Business Canada Facebook group.

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Melody McKinnon
Digital Business & Marketing Manager at  | Website |  + posts

Melody McKinnon is an internet entrepreneur with 25 years of experience in a wide range of online business models, backed by a formal business/marketing education and enhanced by training and mentorship. She has owned or managed both educational and ecommerce websites. Her book, 7 Recession Proof Online Businesses to Start From Home, is available from all major ebook retailers.

Melody has worked with many businesses in a multitude of capacities. She can often be found on CanadianDigitalMedia.com, CanadiansInternet.com, CanadianFamily.net, and AllNaturalPetCare.com, as well as other quality digital publications. Her content has earned reference links from highly-respected websites, magazines and university textbooks.

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