There has been a lot of talk in the news of late about a looming recession. Many experts are opining that this latest economic trend will be moderate, but long and painful. As such, I am hearing a lot more about recession-proofing and planning for tough times now in our industry client strategy sessions. One question that regularly comes up is, “Can a partner help us to recession-proof our business?” The answer is a resounding yes — the key to getting to ‘yes’ lies in picking the right partner strategies now to help bolster your success during any perceived or actual downturn in the market.
There are a few naturally occurring areas where partners can help you stem the tide in difficult economic times:
Alternate sales channels are capable of not only generating awareness, but also closing sales.
The channel has long been an outsourced demand and sales engine in many industries across the world. In times of economic uncertainty, this role often expands to include using more indirect channels to market that are variable in compensation versus hiring more salespeople.
Since it becomes more challenging to sell in tougher economic times, you generally need more sales head equivalency to deliver the same revenue numbers as you delivered in the past. When your firm is cutting headcount expenses, this uptick in salespeople is often not affordable or budgeted. As such, firms will turn to channel partners to drive the sales they need.
One word of caution: Do not make decisions on how you compensate partners longer term, such as renewal/residual tails that are evergreen, during a severe economic time. This may lead to you overpaying the partner in the long term. Instead, plan now on what your outsourced sales strategy might be and how you will offer spiffs that are shorter term in nature, or pricing differences that drive to closed sales. A good partnering strategy is one that works both in fast- and low-growth markets; invest now in creating that plan for your business.
Outsource strategy to save on internal resource costs or overcome the high cost of hiring and retaining talent in a competitive employment environment.
Let’s face it, the ability to recruit plus the cost of talent, especially technical talent, is still on the rise. In tougher times, these extreme salaries for technical talent can really break the bank and your budget. Many firms turn to partners with those technical areas of expertise to save money and have the needed resources.
It’s a great idea to map the talent you need in your business, the cost of the talent, and how you might outsource some of the talent needs should you find yourself in a time of economic pressure. Get those relationships started now, test out some providers, look at quotes, and begin to consider how you move the work to these outsourced firms in an efficient manner. The plan you make today will save you a lot of time and energy when you need to act upon a headcount savings plan.
Create “can’t be beat” partnerships as a business extension strategy.
This partnering strategy is sometimes overlooked as a way to avoid discounting, long sales cycles, or competitive preferences for other providers. During a downturn, this strategy can be even more useful. By partnering with someone else who sells a tangent solution, you can come to the table with strategies that your competitors can’t beat.
You may use a discount for buying from both firms, special product offers, exclusive support offers, or other benefits that you and your partners create to inspire your customers. The bottom line is offering a benefit to the customer for buying from and staying with both firms. Take a look around your market, identify who you might create this type of partnership with, and test it out now before you need it.
Partners can offer a kind of financial support method for your business.
Partners can bring either real dollar investments or offset costs, such as collections for your business, depending on the partnerships established. You may find, for example, that discounting and reselling your product as a white label offer to another firm, so that they can bundle it into their offer to the market, would both quicken your sales cycle and reduce your risk from end-user payment cycles.
These arrangements can offer a way for you to accelerate free cash flow and reinvest your funds in areas like product development, which may have a larger impact on your long-term viability and success. Of course, you will want to carefully consider what you allow to be resold and how far you distance yourself from the end user customer to reduce your risks. However, this strategy can be a money maker for your firm, so it’s good to take a look at this now if you have not already enacted this strategy.
These are just a few of the ways that a partnering strategy can be a good offensive or defensive strategy during a recession — and now is as good a time as any to try these strategies out and ensure they are ready for you if you need them. As always, happy partnering and remember those who partner grow in times of recession!
