Small Business Recession Growth Strategy in Practice

  • Comments: 3
  • Written on: July 14th, 2009

A recession is a massive opportunity for a small business that is willing to take a few calculated risks for a big reward.  While your competitors are petrified by fear – real or manufactured – about what the future holds, your business needs to seize the present.  By moving aggressively with calculated marketing moves you can snatch customers and marketshare for your company while your competitors’ fears become their reality.

Over the past few months I have written about:

I know these strategies work because I employ them in my computer repair company, Schrock Innovations.  Schrock was started in 1999 and controls a commanding share of the Lincoln and Omaha computer repair marketplace.  We have zero debt, great cash flow, and we are taking in an average of 162 new customers each and every month in 2009.  We are GROWING in a recession.

People Get Scared, Businesses Can’t Afford To

Fear is a devastating handicap that can paralyze you fatally in life.  Small businesses are owned by real people, and real people can get spooked by a down economy.

To overcome personal fear you have to learn to compartmentalize.  You are a person and your business is another person.  Your objective is to make a living and get a return on your investment.  Your business’ job is to compete, deliver products and services, and satisfy its shareholders (you) by generating a return on investment.

While this advice may seem silly at first, the peace of mind it will give you is enormous.  That peaceful space is what you need to make broad, calculated, and aggressive movements to grow your business.

Think back to a time in your life when you were genuinely scared – primally scared.  Would you have been able to make a business decision, or even decide what you wanted for dinner later that day?  You were probably so focused on the problem at hand that you couldn’t step back and make any sort of objective decision.  If your business is scared, it can’t function properly either.

Recession Creates Opportunities

In November 2008 I pulled the trigger on an expansion plan that had been in the forks for over 6 months at Schrock Innovations.  At that time, the auto companies were failing, AIG went bust, the credit markets froze, and businesses everywhere went into a holding position to see what tomorrow brought.

We elected a very liberal president and the Congress was with him.  President Bush was bailing out anyone with a hangnail.  There is only one place where this can go over the course of 4 years.

No matter what your political leanings are, more government involvement in business means slower decisions, unpredictability, and lower ROI in the long term.  Jobs were going to bleed from the economy for more than 2 years.

All of this sounds pretty bad unless you step out of your business and look at this from an ROI perspective:

  • Increased unemployment means your employees are less likely to go elsewhere.  This lowers your training expenses
  • A business downturn means TV, radio, and newspaper advertising gets much less expensive – especially if you commit to the long term
  • Tight credit markets mean your competitors’ ability to match your moves will be slower.  No credit means they will wait to see how you do before they jump in.
  • Low consumer confidence means your larger competitors will press prices lower and fund the decrease with service level cuts
  • Everyone else is scared to buy a stapler, let alone a new piece of productivity equipment

Take this example:  During the onset of the economic downturn McDonald’s could not get financing to buy their new fancy coffee equipment.  As a result, small coffee shops across the country had a three month window where they knew exactly what McDonald’s was going to do and how they planned on doing it.

A smart coffee shop owner would have protected his local market share by communicating some facts about McDonald’s coffee to their customers.  For example:

  • Did you know that many of McDonald’s coffee products come from a base syrup – like soda does?
  • The training manual to make McDonald’s coffee is less than a page, but there are wall posters on how to package it nicely
  • Fries and coffee don’t mix

An entire guerrilla marketing campaign could be assembled around these three points, communicated in various ways over a three month period, and a barrier to McDonald’s entry in a small trade area could be erected.

Aggressive Does Not Mean Stupid

Being aggressive is easy in most cases.  Being aggressive in an intelligent way is more difficult.

I am not suggesting you blow an entire year’s budget on one big thing hoping it hits home – it probably won’t.

The way you do everything inside your business should have changed in 2009 because of the economy.  Your advertising cost should have gone down – if you asked for it.  Your rent or lease may have dropped – if you sought the decrease.  Your people are probably more productive, meaning a better ROI.

What I am suggesting is taking those gains and spending them instead of banking them as profits.  Spend them to buy even more advertising, increase your productivity, or retire debt.

By making smart moves your business will become stronger, your ROI will increase over time, and your competitors will wonder how on Earth you are able to afford all of this in “this economy.”

  1. cash loans uk said on July 17th, 2009 at 7:32 am

    Could not agree more.. much of the fear of recession is manufactured and most big companies are skeptical of taking risks and investing in high end services. It makes sense for small companies to get benefit out of that.

  2. Free Reminder said on August 4th, 2009 at 12:08 am

    A large number of entrepreneurs, in fact, see a downturn as a time of opportunity. Not only do they have excellent employee choices, but as other areas of the economy tighten, many larger businesses are outsourcing services that small business can step in to supply. Entrepreneurs, after all, are noted for finding opportunity in the most unlikely places – why not a recession?

  3. Herbal Fiberblend said on August 18th, 2009 at 1:15 pm

    Its so true that people stop performing during a recession and think they can just shut the door and wait it out – in reality this is the time when true professionals shine, the time to be clever about your marketing, increase market share and drive down costs – really interesting post – cheers!

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