The global economy has been hurting for the past three years due to the interruption that resulted from the pandemic that distabilised businesses and disrupted livelihoods.
Economists, on the other hand, have warned that things could get worse due to the ongoing war between Russia and Ukraine which has hurt businesses, further warning that the global economy might go into a recession before the end of this year.
In Kenya, thousands of businesses were forced to shut down due to the effects of the pandemic and the uncertainty caused by the upcoming August 9 polls has made things worse.
A recession forces people out of the work due to poor performance of the economy, making them limit their spending. This in turn forces businesses to shut down.
In Kenya, a country whose economy has been propelled by start-ups, has seen some of these MSMEs such as Kune foods close shop due to unfavourable market dynamics.
Despite the challenges, there are ways business owners - especially those who are setting up their enterprises - can navigate the effects of recession and remain afloat.
Adjust Prices to Current Economic Trends
Startups can survive a recession by modifying their prices to suit market trends. This can include lowering the cost of their goods and services.
While businesses hurt during a recession, it is also important to recognise that consumers also hurt during harsh economic times.
Lowering the cost of commodities can attract customers to your business as they also seek to cut their expenses and go for cheaper options.
Marketing
While many startups tend to cut down on their expenses during a recession, it is important to continue marketing products and services in order to maintain the flow of customers.
However, for the marketing to be effective, it is advisable that the marketing of such products targets specific clientele that is interested in the products or services offered by the startup.
This can be done by studying the target market to better marketing strategies.
"Analyze markets for opportunities in both good times and bad ones. People spend more on what they want when the economy is going well and spend less to focus on needs during a recession," Dave Sackett, an economist explained.
Demonstrate the Importance of Product or Service
During recessions, people tend to purchase commodities that are only of necessity to them. Therefore, it is advisable to demonstrate to the public that your product is important to them and that they need them.
This can be done through strategic marketing and crafting unique advertising messages that can be able to influence the decisions of the buyers.
Give Customers Offer
During recessions, people tend to go for products and services on offer as they are assured of saving costs.
More often than not, established businesses have developed this strategy and offer products at discounted rates. The move not only attracts customers to be loyal to the brand but also brings on board new ones.
In the end, this translates to more business.
"Review trends in past customer sales data to see what your business sold in a recession, and then try to build value around those products or services by enhancing your offerings with new revenue streams or upgrades," Sackett added.
Diversify of Products
While venturing into a specific niche is important, diversity can offer startups a lifeline as they strive to survive during harsh economic times.
This can be through introduction of products that may be needed by Kenyans at a specific time. However, it is important for startups to monitor the market and observe the needs of Kenyans at that given time.
Additionally, a business can also monitor the performance of the new products to evaluate how well they fit into the market and determine if it is getting any value for its investments.
