How To Recession-Proof Your Business In The Next 90 Days

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1:31Head to granola.ai slash MBA and get three months free with the code MBA. That's granola.ai slash MBA and get three months free with code MBA. The TV pundits are saying that we're not technically in a recession. Please, if you've been to the grocery store, you know we're in a recession. And if you're a business owner, right now, you know it's definitely a recession. Leads are slower. Customers are hesitating. Deals that used to take a week are taking a month. Right now, you have a 90-day window before things get a lot worse. Businesses that come out of recession stronger are not the ones that get lucky.

2:14They're the ones who go on the offense, that don't play scared. Two of my most successful multi-million dollar businesses were built out of a recession, and one of them went through two recessions, and it still changed my financial life forever. Today, I'm going to show you exactly how I did it. And I'll also share with you the truth about the lessons I learned the hard way and what it cost me in the process. At least I get to share those lessons with you today.

2:46Welcome back to the$100 MBA show. I'm your host, Omar Zinhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday to help you start, grow, and scale your business. If this show has helped in any way, it would be amazing if you could drop us a quick review on whatever app you're using to listen to this podcast right now. It helps me and my team bring new episodes every week. And more importantly, more entrepreneurs will be able to discover our podcast so you can help someone else start their journey. Thanks so much. When COVID hit in 2020, Webinar Ninja, the software company that Nicole and I built back in 2014, we started in 2014.

3:26It exploded in 2020 because of COVID, right? Overnight, everyone needed webinars, businesses, schools, yoga studios, gyms. We had karate instructors running classes through our platform because our studio was closed because of the lockdowns. We had churches running funerals via webinar because people couldn't go to church anymore. Now, as sad as that situation is, our company and our numbers looked incredible, right? Signups skyrocketed. Revenue went up. Growth charts were off the charts and in the right direction. And for a moment, I thought we caught a wave. We did. But it was the wrong wave because lockdowns ended and the world opened up and those customers left.

4:12It was not because the product was bad. It's because webinars were not how they actually wanted to run their business. the pandemic forced them to do it. And the moment they didn't have to do it anymore, they can do their karate classes in person and run their events in the church and all that kind of stuff. And everything was back to normal. They didn't need webinars anymore. So we saw a dip. It wasn't a catastrophic dip, but it taught me a big lesson. Growth that comes from external circumstances rather than genuine product market fit is not real growth. It's just borrowed time. It's just like getting money from the government.

4:45It's temporary. And then when the circumstances change, the customers will leave with that change. The businesses that are genuinely recession-proof are not the ones that rode the wave. They are the ones that are built on something customers cannot live without. It's that simple. That distinction between what people want and what people need is the entire game. And I smile because it took me so long to get this. And once I got it, everything got easier. So let's start with talking about the biggest mistake business owners make in a recession and how you can avoid it. Let me tell you what most business owners do when a recession hits or looks like it's coming, right?

5:26They buckle down. They get nervous. Their palms get sweaty. They cut expenses. They tighten the belt. They tell themselves they just need to absorb it like it's a wave, right? A wave coming crashing down. If I just can absorb the wave, everything will be fine. Everything is going to be calm very soon. And they stop moving forward. I understand why. When things are uncertain, the instinct is to protect what you have, right? It's also instinctual for a lot of people to not do anything. Like, let's just not do anything. Let's not change anything because if we don't do anything, we don't add another factor we have to worry about.

6:03So what they do is they hold cash, They cut costs. They reduce exposure, right? And that makes sense. It makes perfectly logical sense. It feels responsible, right? But here's the problem with playing defense in a recession. Defense does not grow your business. Defense does not win you new customers. Defense does not deepen the relationship that will determine whether your customers stay or leave when they're starting to cut their own expenses. Because again, everybody's in a recession. Defense at best keeps you alive. but it won't win you the game. In a recession, the businesses that become irrelevant are the ones that disappear.

6:40You have to be on the offense. The right move, the move that separates businesses that are stronger after a recession, and I've done it, are the ones that don't just survive. They go on the offense. They go aggressive. They put the pedal to the metal. And now is the time to do it before it gets worse. So what do you do? What does a recession-proof business actually look like? First, I want to say that recession proofing is not a set of tactics. It's a fundamental quality of your business. This is key here. So listen up. Does your customer need you or do they just want you? Listen, you don't have to be in the life-saving business.

7:19It's statistically proven that most people, when they're cutting costs, the last thing they cut is Netflix. Do you actually need Netflix? No, you can entertain yourself in other ways. There's TV that's free. You have YouTube. You have other streaming things that are free. But the customer still needs Netflix because it gives them a good level of enjoyment and enough level of enjoyment in entertainment that makes it a valuable product. Whether you like it or not, you need to be entertained. You need downtime. You need a way to maybe forget the hard day you had. So ask yourself, does your customer actually need you or do they just want you?

7:57Is it just a nice to have? There's a massive difference here. When things start to get cut from a budget, from a business's budget, from a family's budget, there's certain things that stay and there's some things that leave. I'm gonna give you a good example. If you run a gym and your gym is kind of one of those, like we're for everybody gym, right? If you have never worked out in your life, we're not intimidating, you can come and work out. When things get tight and people need to start cutting subscriptions, your customer base, the base that you are targeting in this type of gym will cut your membership because they don't take the gym seriously.

8:30It's not a need for them. They can go for a walk, they can go for a jog, they can do some push-ups if they actually want to do some workout. And most of them won't even do that because exercise is really not a priority. They're paying whatever,$19 a month, and they go to the gym maybe three times a year. Now, if your gym, for example, was targeting serious athletes or people that take health and wellness seriously, whether they're in their 30s, 40s, 50s, they're taking the supplements, they're measuring their macros and all that kind of stuff. they're not going to cancel the gym membership. It's a part of their identity going to the gym.

9:01If you're running a business, there are key tools. I can't cancel, okay? My accounting software, Zero, right? We use Zero. It's a membership every single month. I'm not canceling this thing. I can't stop running payroll. I can't stop paying my bills. I can't stop having bookkeeping. My project management tool, the software that we run, we use Basecamp, right? Our team runs on this tool. This is how we communicate. Even if I cut all the costs in the world I can, I'm not cutting that. This is how we work. I need Basecamp. I need zero. So you need to be honest with yourself right now. Where does your business sit in the spectrum of your customer's life?

9:39Is it a need or is it a want? Think about for a second, how hard would it be for your customer to cancel? What are they losing out? How hard would it be for them to switch to a competitor? We're going to talk about building a moat so that you protect it. But is your business a need or a want. If you are a want and not a need, the next 90 days is the time to become a need. Here's how. I just mentioned it. Build a moat. The single most important thing you can do in the next 90 days is build a moat around your best customers. You know what a moat is? It's that bit of water in front of the castle to stop people from intruding, from taking over the castle.

10:18We're not talking about acquiring new customers. We're talking about protecting the ones you have. In a recession, every one of your competitors is going to start competing more aggressively from the same pool of customers. Why? Because I told you, in a recession, the smart players go on the offense. What are you going to see from your customers? Well, they're going to start dropping their prices. They're going to start making bigger promises to their customers. And you're going to start seeing some desperation. It'll be visible. Your competitors are going to start approaching your customers. and your job is to make switching to the competitor not worth it.

10:53Here's what building a moat actually looks like in practice. Increase the switching cost. The more you embed your product or service in how your customer runs their business, the harder it is for them to replace you. I gave an example with Basecamp, our project management tool, how we communicate with our team is through Basecamp. That's a tool we use every single day. Our team, every morning when they open up their computers, it's the first thing they go to, it's where they work, it's where they communicate, It's where all the data lives, where all the chat history is. It's where all the decisions are made.

11:20So leaving this tool is not just a financial decision, right? Maybe the company is going to save some money, but they're not going to save time and productivity because it's going to cost them a lot to get the whole team to move this heavy ship to a different direction. Another different thing. It's really hard. And it's just painful even just thinking about switching off. It's a disruption. It's a project. And honestly, it's a risk. This makes it harder for people to leave a product like that. Make yourself harder to leave by becoming a more central part of how your customer operates or lives if it's a B2C, business to customer.

11:59So one of the ways we did this with our webinar software, Webinar Ninja, is we built integrations, deep integrations, custom workflows, things that work for the business, for the business we're serving. So for example, when people signed up for a webinar, we integrated with their email marketing software so they get added to their email list. Redoing that integration and that flow is a lot of work. We had built-in email follow-up sequences after the webinar was over and they wanted to send an offer or the replay. That's all done. Having to migrate all that work to another software is a lot of work.

12:32So build a moat around your business. Investing with Schwab is like spending a Saturday at a great farmer's market. You can fill your reusable tote with a bit of everything. Maybe you go for some free-range, self-directed investing. Or perhaps you pick up a few farm-fresh trades while you peruse. You can even get help from a dedicated advisor. That's full-service wealth management. Mix, match, and change your mind whenever you want. Because at Schwab, you can invest your way. No matter your goals or appetite for investing, Schwab has everything you need all in one place. Visit schwab.com to learn more.

13:07One of the biggest growth hacks is realizing you don't have to do it all yourself. That's how you can scale your business. This is why I'm so excited to have Upwork as a sponsor because I've been using Upwork for over a decade. Why? Because it makes it easy to bring in the right freelancer when you need them so you can stay focused on what you do best. Upwork is a one-stop shop platform to find, hire, and pay expert freelancers across web and software development, data and analytics, marketing, business operations, and more. I've made some of the best hires in our company through Upwork. I'm talking about people that changed the trajectory of our entire business.

13:49It's free to sign up to Upwork, and posting a job is super simple and easy. Upwork helps grow your business by giving you fast access to specialized talent across 125 categories. It makes it simple for you to just fill in those skill gaps, to launch projects faster, and scale your support up or down without committing to full-time headcount. And let me tell you about Business Plus. It's a game changer. With Business Plus, you can access the top 1 % of talent on Upwork. And with AI-powered shortlisting, you'll get matched to the right freelancer in under six hours. No endless searching required.

14:26Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top uptown ready to help your business grow. That's upwork.com, upwork.com. Next, increase the relationship. Recession reveals the difference between vendors and partners. You want to be a partner with your customers. A vendor just sends an invoice. Pay this, right? A partner is someone who calls and asks how things are going. How can we do better? Are there any other problems we can solve for you? You want to be proactive as much as possible. Show up for your customers. When I was in a recession multiple times with my business, I ran a monthly webinar with all my customers.

15:10I had an open webinar that all the customers can come with 30 ,000 users. They can come ask me questions, get the most out of the software or demo new features. So they'll be like, oh, wow, I didn't know you can do that. It increased the value of the product in their mind because they're like, wow, not only am I getting all these new features, but I also have this awesome webinar I can go to every month and ask questions and get things solved. Notice I'm not selling anything to them, right? I'm not. I'm not upselling them to the next product. No, I am just deepening our relationship. I'm adding more value to the equation.

15:40I'm asking what's hard for them right now. I want to know what they need that they're not getting right now. And what are they feeling pressure from, right? What is really keeping them up at night? Those conversations will tell you so much about how to serve your customers better in the next 12 months. It's worth more than any market research you could buy. And guess what? Your customers will remember that you reached out to them, right? Whether it's a one-on-one call or a webinar or an email, people notice. Next, leave enough value on the table that cutting you is painful. This is why I gave that Netflix example in the beginning, because Netflix, you know, for all intents and purposes in terms of our needs to survive, Netflix is not a need, but it's actually a pretty good way to fulfill our need to be entertained, okay?

16:25There's so much value on the table, meaning that you get so much for what you're paying for. It's really hard to cancel. And in my opinion, this is the most important concept, the most important concept to build your moat. Your customer needs to feel that every single month they're getting significantly more than what they're paying for. Why is this important? This is important because every single month, if you have a reoccurring business, every single month or every single year, you have to win over your customer. You're reselling the product because they can cancel at any time. So if they constantly feel like they're not getting ripped off, in fact, you feel like they feel like they're getting a steal, like this is a great deal.

17:01then you have the ability to be the last thing they cancel. You're not just fair value. You're obvious. You're undeniable. It's hard to replace the value that you offer. If they ever sit down and they look at their expenses in their business or their life, the conversation should sound like this. We can't cut this product. It's essential. When you experience this, that feeling is not an accident. It's engineered through consistency of over-delivery, right? You want to be consistently only over-delivering. You want to be communicating this value. You want to make sure that they are actually using and benefiting from everything that you provide.

17:34So build a moat right now, before they start cutting costs. I'm going to give you an example of this. When we were running member webinars every single month, one of the questions I asked in the chat was, hey, why are you running more webinars? Why are you using the software more often? And a lot of people say, I just don't have the time. I get nervous when it's live. And those answers allowed us to build a feature that was revolutionary at the time, which was automated webinars. So we said, hey, we have a new type of webinar you can run that solves that problem. You don't need to be there. You just shoot it once and people can watch your webinar at any time.

18:08In fact, you can turn an old live webinar into an automated webinar right now in two seconds. Let me show you. Let's get to part two of today's lesson, and that is pricing. And this is the move that most business owners get wrong, completely wrong in a recession. They cut prices. They think, hey, customers are just tending to spend less. So if I lower my prices, I'll keep more of my customers. Seems logical, right? Do not do this. Cutting your prices in a recession is one of the most damaging things you can do to your business and your brand. And here's why. When you cut prices, you signal one of two things to your customers.

18:47Either that your prices were too high to begin with, which destroys trust and makes them feel like they got ripped off, or you are desperate. Both are disastrous because if you look desperate, you destroy confidence in your business and your brand. And desperation can be smelt a mile away. You don't want any of those two to be a part of your business. And here's the practical reality. Everyone's prices are going up during a recession. Inflation is real. Costs are rising. Suppliers are charging more. And customers know this. They see it around them. They see them when they go to the grocery store.

19:19They see in the gas prices when they go to the pump. They see prices going up. This is an opportunity for you. So when you come to them and you say to them, hey, we know times are tough. And this is why we are not raising our prices. We're holding our prices the way they are. You become remarkable. You become somebody who cares. That is loyalty in action. It's a differentiator. And guess what? The person that gets in front of it and says, hey, we're not going to raise our prices like everybody else is doing. You're top of mind. You're the last one they're going to cut. This lands strong with customers.

19:50I've done it many times. For customers who want security, who want to feel like, okay, the next year, I don't have to worry about this price going up. You kind of answer that question in their head. All my prices go up in my business, all my products going up. If you go and say, hey, we're not going to rise prices this year because we know times are tough. In fact, lock in an annual subscription, lock in a long-term deal, and you're going to get this special bonus price, which is the bonus price for an annual deal anyway before the recession. So the point here is that both people win. Your customers get peace of mind that you won't hike up things on them, but you also get a long-term commitment that gives you cash up front.

20:28Hey, if this episode is giving you a plan and lowering your anxiety, I want you to subscribe to the show because you're going to get better and better every time you listen to a new episode. In fact, we have an episode that I'm working on right now that I can't wait to share with you. It's called I Read 50 Books a Year, because I do. Many of them are just absolute flops. And I share with you the ones that you only need to read. These are the ones that are actually going to help you become successful. So you don't need to read 50 books a year. There are less than a dozen books that I recommend that will change everything for you.

20:58And I'll share with you in an upcoming episode. Hit subscribe so you don't miss it. Part three of today's lesson is to remind you that when you're in a recession, which we are, that you are in wartime. Okay, I'm talking directly to you right now, who is listening, who's watching. You are a business owner, and you're in a recession and about to get into a very dark time in the economy. Revenue might be down, customers might have left. You are not sure what the next month is going to look like. I get it, you're scared. But what I want you to hear from me is that this is wartime. Not metaphorically, literally, you're fighting a war.

21:37Your business is under attack from forces outside your control, economic conditions, customer confidence, tightening budgets, all the stuff that are not in your realm of influence. You're in a fight. And in a fight, waiting is losing. Peace will come. Recessions will end. The economy always recovers, but will you make it? And the businesses that survive are the ones that don't wait patiently for that to happen. They're the ones that fight for every customer, every dollar, every relationship during the hardest months they're ever going to see. This is what fighting looks like because I've been there and I get butterflies in my stomach just thinking about it, just sharing this with you because those are the days that made me who I am today.

22:26This is what it looks like. You take massive action on your existing customer base. You pick up the phone, you talk to them, right? You send that email, you run that webinar. I was talking to customers constantly, more than it feels comfortable, more than it feels necessary. I asked them what they needed, what they're going through, what's hard. I asked them what would make the next six months more manageable for them. I gotta tell you, I've spoken to over a thousand customers in my career. I can't remember one time somebody not willing to tell me the answers to those questions. They are so appreciative that somebody's even asking these questions, let alone the founder of a company.

23:05And guess what? Through those answers, they're going to give you your product roadmap. They're going to give you your next service offering. They're going to give you your retention strategy, right? All through a conversation. The businesses that thrive in recessions are not the ones with the cleverest marketing or big time strategy. No, they're the ones that have deep customer relationships. Those relationships are built through contact, consistency, genuinely valuable relationships. And when you reach out to your customers, when you're accessible, when you actually genuinely care about their wellbeing and their survival as a business or their livelihood or whatever it might be the way you're serving them, they will not forget it.

23:50Not only now in the recession, but later in the future when things are great. Here's a gem that you don't want to miss. Every recession creates new problems, new urgencies, new things businesses are desperate to solve that did not exist six months ago. Where do you think Uber Eats came from? Uber Eats came out of the need of needing to get food when they couldn't leave the house during COVID. The businesses that come out ahead are the ones that identify the new problems early. They build solutions for those problems, and they become at the top of their game because they're early. So ask yourself, what does my customer need right now that they did not need before the recession?

24:31That question is worth more than any marketing budget. Now, I'm not against cutting the fat, but I'm against cutting the muscle. There is a version of cutting expenses that is smart and a version that can really hurt your business. This is what smart looks like. Cut the things that are not generating value. subscriptions that nobody uses, ad spend that is not converting, events that are not actually building real relationships, catastrophic cuts, cuts that really ruin your business are the cuts that make your product better. You don't want to cut those things. You don't want to cut things that are serving your customers.