There is a recession around the corner, and that’s a fact. Daunting, isn’t it? It feels like we only just got out of a crisis after years of a global sanitary crisis, and yet it seems like we’re headed head-first into another one. While we could indeed run around like headless chickens, cursing the universe for our unfortunate fate, we can also begin preparing for a recession.
But, how? Creative industries are known to suffer under the pressure of a recession. Creativity goes out the window when survival needs to be prioritized. Still, perhaps there’s a way to begin recession planning before we are actually hit by it mercilessly. Thus softening the blow, and allowing us to navigate these turbulent times slightly more smoothly.
Here are 4 tips to follow when preparing for a recession.
Preparing for a recession: Make less, sell fast
Brands are shifting towards more efficient design. Rather than splurge on huge collections and a vast array of garments, focus on fewer pieces that could be highly sellable. We can understand why many brands would prefer to do the opposite. Create a lot of variety, a lot of quantity, as a way of selling large amounts and making, in theory, more money. Yet the costs for designing and producing such large collections are high, and the risk of something not selling increases. Therefore, a controlled, more stable growth that incurs smaller production and design costs might be the way to go when preparing for a recession. This way you avoid overflowing stock piling up in some storage somewhere as it devalues after not selling.
Producing less also translates into incurring fewer sampling costs and simpler inventory management.
Data-driven decision-making is key for recession planning
We know we know, that not being able to follow your heart’s desire and let your creativity roam free when creating a product sucks. You want to make what you want to make, whatever your imagination conjures up. Unfortunately, our imaginations do not always align with the market’s demands. And in times of hardship, we have to make sacrifices. As such it is imperative to make data-driven decisions so as to maximize our ability to make money in a recession. This means studying the market in depth before beginning our design process. Are there any gaps in the market? What is the price point of our competitors? How fast are the fluctuating trends changing customers’ purchasing behaviour? Then, more importantly, act accordingly. Adapt your strategy to the numbers if you want to make money in a recession.
Customer data will become one of your most valuable assets when preparing for a recession.
Making money in a recession means developing products with high-profit margins
Restaurants make much more money on drinks than they do on food. They of course need the food as it is the main appeal, but they hone in their craft, offer a select reduced variety of dishes that they can expertly cook and then drive profits with drinks. So push whatever your brand’s version of drinks is. Find a balance between continuing to design those items that are iconic and key to your brand, but pushing sales of pieces that have high-profit margins. For example, masks are some of the cheapest items to produce and are easily marked up. If you’re an artist, perhaps you could find a high volume of commissions of work you’re already an expert at to economize your time.
All in all, focus on key products and items with high-profit margins and ditch the rest. Less is more in this case. Literally.
Simplest instruction, hardest execution: Cut costs
Now, this might sound like the simplest technique of them all, and yet its execution is often the hardest. With an upcoming recession on the horizon, you’re going to have to take a deep look inwards and cut costs wherever you can. With online shopping and online marketing strategies becoming a staple, many creative businesses are closing down physical shops or renegotiating rent. Perhaps if you do indeed produce fewer garments you can close down a warehouse.
This might sound like an obvious thing but… Don’t hire new employees. Exploit the talent that is already a part of the company. Built your junior employees up and ensure that every single person is valuable and using most, if not all, of their potential. Eliminating redundancies and consolidating responsibilities in job roles will help you prep immensely for the upcoming recession.