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The global economy has been struggling over the past few years; mainly due to the economic shocks that followed the outbreak of the COVID-19 pandemic. Now 3-4 years later, we may have another crisis on our hands – the possibility of a global recession. 

According to Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), the outlook of the global economy has “darkened significantly” in recent months as a result of the ongoing Russian-Ukrainian war and the entire world seems to be at an increased risk of facing a recession during the next 12 months. 

News of this has already caused ripples of fear to spread and “How to prepare for a recession 2022” has quickly become a popular search on Google Trends. If you are a marketer, salesperson, or even a business owner, it is pretty likely that you are already trying to devise a strategy on how you can protect your company and its revenue through this economic downturn. Luckily for you, we have an insightful guide on what you can do to safeguard your business operations and bring in sales qualified leads even through these uncertain times.

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What exactly is a recession?

To better understand how we can combat a recession effectively, we must first have a clear understanding of what it actually means to be in one. 

The most common indicator of a recession is when we see two consecutive quarters of negative GDP. However, the National Bureau of Economic Research stated that for an economy to be considered in recession, there must be a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment rates, industrial production, and wholesale-retail sales.”

Similarly, according to the World Bank, the primary indicator of a global recession is when we see multiple major countries’ economies contract at the same time as well as when we observe other evidence of weak global economic growth.

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How are businesses affected by a recession?

Big or small, recessions are felt by all. Having said that, the size of an enterprise can determine the severity of damage done by the global economic downturn. Despite the fact that small businesses experience the same recession risks as larger ones, their lack of scale leaves them more vulnerable and at an increased risk of failure during economic downtime.

While recessions typically last for only a few financial quarters, their ripple effects can even be felt for decades. Here are a few examples of how an economic downturn could affect your business:

1.  Shrinking profits

As the economy slows, consumers and competitors become more cautious about spending as margins will go down due to reduced incomes on all fronts. This means that a company’s expected sales may be more difficult to generate, and they may need to cut costs accordingly to maintain sustainable ROIs and margins. Therefore, businesses are less likely to invest in new products, employees may be laid off, and overheads are reduced to compensate for a decrease in profit.

2.  Credit crunch

Aside from businesses and households, lenders also become more cautious with their spending. Lenders can tighten their belts, making it more difficult for businesses to access traditional lines of credit and borrowings. Interest rates may rise, and lending requirements may become more stringent.

3. Drying cash flow

When facing a global recession, both vendors and customers find it more difficult to make timely payments. Businesses may have to spend more time chasing down invoices, potentially delaying their own payments to suppliers. The situation can become difficult, especially for those who sell in the B2B market. If one of the main customers closes their doors, their bills may go unpaid.

4. Dip in stock prices and dividends

Reduced cash flow and profit do end up showing up in a company’s official financial statements, including the quarterly earnings report. Dividends may be reduced or eliminated at this point. As stock prices fall, shareholders may even demand new leadership.

5. Drop in product quality

One of the ramifications of a global recession is the drop in the quality of products. Companies end up looking for new ways to cut costs and improve their bottom line as manufacturing slows and bills go unpaid. When you cannot afford to adhere to your usual standards, this may temporarily reduce service or product quality.

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How does a recession affect lead generation?

Bringing in new business is difficult in a booming economy, let alone during a recession. Potential customers and clients are more cautious than ever about what they invest in, they think about their purchases more carefully and take longer to make decisions. This means that finding quality leads in order to grow your business becomes drastically more difficult and prolonged.

However, there is a silver lining.

Typically when facing a recession, inflation rates fall, while borrowing rates remain low. If you can overcome the challenges of obtaining finances, you will be able to benefit from lower loan repayments. Additionally, economic downturns may force some businesses to close, reducing competition and providing space for market growth.

Recessions also give businesses the opportunity to reinvent themselves by looking for new ways to cut costs and add more value to customers. You may even decide to experiment with a new business model that involves lower financial implications such as outsourcing certain business functionalities. 

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Outsourcing your lead generation during a recession?

Preparation is key to keeping your business afloat in the event of a looming recession. In a fast-changing economy, selective outsourcing enables you to gain flexibility and efficiency, meaning that it is one of the best ways to weather an economic downturn.

Let’s take a look at the potential benefits of outsourcing your lead generation:

  • Low costs and quality tools

Outsourcing your entire top-of-funnel lead generation to an agency during a recession can be a wise business move, especially in terms of lowering costs while maintaining the lead flow quality as well. It reduces internal costs as it eliminates extraneous expenses such as salaries, medical insurance, etc. Statistics state that outsourcing your entire top-of-funnel lead generation to an agency costs approximately 62% less than hiring a single in-house employee – a significant saving that can be reinvested elsewhere in the business model during a crisis.

Additionally, you can rely on your out-house specialists to have all of the necessary technology in order to really make a significant difference in the organisation, integration and penetration of marketing activities. Time-saving marketing software like HubSpot allows leads and related actions to be tracked every step of the way, enabling your company to make the right marketing and sales moves, at the right time and giving you more of a chance of succeeding.

  • Increased business efficiency 

One of the other benefits of outsourcing is the increased efficiency that a business is exposed to.

On one end you get to wholly focus on your company’s strengths and on the other, you have a group of professionals working together in their niche doing what they do best – creating the best of both worlds. And remember it is fine if you decide not to move your entire marketing department to an external firm, but simply taking pressure away from your in-house staff in some form can be greatly advantageous in the long run.

  • Less stress for your employees

Layoffs are common during a recession and it ends with your remaining employees being overwhelmed with their newly added responsibilities. When you outsource certain segments of your business, you not only avoid putting on additional stress on your staff but you also mitigate poor morale in the workplace. As we mentioned before, outsourcing marketing does not mean abandoning in-house efforts entirely; many aspects of your marketing and sales strategy can be effectively outsourced, relieving pressure on your in-house team while bringing in specialists to assist in areas where you are lacking in experience, knowledge, or resources.

Final Thoughts…

The key takeaway from this read is to understand that recessions are inevitable in a business cycle the same way that natural disasters are inevitable in nature. Hiccups like that should not be viewed negatively as it does encourage business owners to be more savvier and more strategic in their operations. The best way to go about working through an economic downturn is by understanding how a recession can impact your business and preparing well in advance to counter that. From our expert sense, outsourcing your marketing operations in the capacity can be largely beneficial during a recession as it allows you to focus on your core functionalities while seasoned experts concentrate on funneling quality leads into your business.

If you are interested in receiving some support with generating leads then do feel free to reach out to us. At Team Rocket, we have over a decade of experience in Outbound outreach that can be used to assist you in reaching your growth goals.

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