The Storm on the Horizon: Why Canadian Businesses Must Prepare for a Coming Recession
Picture sailing on a calm sea, only to see storm clouds gathering. That’s the situation for Canadian businesses today.
Economic signals point to trouble ahead. The CFIB Business Barometer dropped below 50 in early 2025. This decline raises concerns for entrepreneurs.
Experts warn that Canada may enter a recession by mid-2025, with unemployment possibly rising from 6.6% to 8%. It’s time for businesses to prepare for the storm.
How This Guide Will Help Your Business Stay Resilient
Think of this guide as your map. It provides strong strategies with expert tips and data to help you through tough times.
What You’ll Learn
How to manage cash flow effectively.
Ways to diversify your supply routes.
Affordable marketing techniques.
Building stronger customer relationships.
Finding alternative revenue streams.
Is a recession coming: What the Data Says
Rising National Debt and Tariffs – The Risks Ahead
Canada’s economy is flashing warning signs. The government’s pandemic stimulus has driven up debt to $2.3 trillion. High debt limits the government’s ability to boost the economy during the next recession.
Global trade tensions and tariffs also threaten the economy. In early 2025, small business confidence fell due to fears of US tariffs.
If tariffs are introduced, they will increase costs and harm industries like manufacturing and agriculture. Smart business owners are taking proactive steps now to prepare for the risks ahead.
Small Business Confidence is Declining – What It Means for You
Small business optimism in Canada is dropping. The Canadian Federation of Independent Business’s Business Barometer shows confidence fell below 50 in early 2025.
This marks the third monthly decline. Entrepreneurs sense tough times ahead and may cut back plans, slowing economic activity.
Fears of tariffs, rising costs, and slowing sales are to blame. Trade-reliant sectors have the lowest confidence. Lack of demand and rising expenses are big growth barriers.
While business owners prepare for a possible storm, a well-prepared business can take advantage of the situation to attract customers or talent.
The key takeaway is that you can’t assume “business as usual” will continue.
If confidence, spending, and hiring are dropping among your peers, ask yourself: What can I do now to secure my business? The rest of this guide will help answer that question.
Lack of demand is already the biggest growth hurdle for 54% of small businesses
Rising expenses like insurance, wages, and input costs are putting the squeeze on many. To put it simply, entrepreneurs are getting ready for a rough ride.
This could be a great opportunity for you. If your competitors get nervous and step back, a prepared business can move in. You can attract customers or talent.
The main thing to remember is that you can’t just keep going as usual. If other business owners are losing confidence and cutting spending, think about this: What can I do now to protect my business? The rest of this guide will help you figure that out.
How Recessions Impact Small Businesses the Hardest
Small businesses often struggle during recessions. They have limited cash reserves, narrow profit margins, and find it hard to get loans. This makes them prone to cash flow crises, which are the primary cause of their failure.
In past downturns, small businesses struggled to stay afloat. During the 2008-09 crisis, weak consumer demand slashed revenue. The Federal Reserve found that reduced demand hurt small firms more than the credit crunch. When people cut back, small businesses feel the pinch quickly.
Lessons from the 2008 and 2020 Downturns
Recessions can really hurt small businesses. Let’s check out two recent examples: the 2008 crisis and the 2020 COVID-19 recession.
The 2008 Financial Crisis:
Canada’s small businesses hit hard times. Consumer spending dropped, and credit became tighter.
Many firms fought to survive. Those that succeeded cut costs, renegotiated with suppliers, and found ways to keep cash flowing.
The winners balanced cost-cutting with future investments. They maintained marketing and customer service to gain market share.
The 2020 COVID-19 Recession:
In April 2020, Canada saw a huge hit to its businesses – over 100,000 closed their doors, which was 13.6% of all active businesses.
Small businesses really felt the pinch from shutdowns and a lack of customers.
What set apart the ones that failed from the ones that made it through? Being able to adapt and having a financial cushion.
Businesses with some savings or a decent credit line did much better. Survivors made a big change.
Restaurants offered online ordering. Retailers switched to e-commerce. Manufacturers made things people really needed. Showpass, a Calgary company known for event tech, launched a new platform for virtual events. They didn’t have to lay off any staff.
Sadly, businesses that couldn’t adapt or were in financial trouble often failed. By September 2020, Canada had 5.2% fewer active businesses.
Recessions are tough on unprepared businesses. But companies that act fast, cut costs, and find new revenue streams can thrive and even grow.
We’ve put together a guide to help business owners like you
Download our free “Recession-Proof Marketing” eBook today, and start navigating your business toward greater resilience and long-term success.
What Happens If You Don’t Prepare? Risks of Inaction the coming recession
What if you choose to just wait and see and do nothing to prepare? The risks of inaction for a small business are pretty serious.
First off, there’s the cash crunch.
In a downturn, sales can slow down for months. If you’re not prepared, you might run out of money to pay the rent, suppliers, or employees.
It’s not just a minor risk – most business failures (over 80%) are due to cash flow issues. Not having a plan is like sailing into a storm without lifeboats – it’s a bad idea.
Many businesses that closed early in the pandemic did so because they simply ran out of cash when revenue dried up.
Another risk is forced layoffs and losing top talent.
If things get bad, you might have to let people go to cut costs. This can hurt your business more.
When the economy gets better, you’ll have to deal with hiring and training new staff. It’s better to plan ahead and avoid layoffs by cutting costs elsewhere or using work-share programs.
If your competitors prepare and you don’t, they might seize opportunities that you miss.
If they keep marketing and you fade from consumers’ view, they’ll be the first choice when people have money to spend.
If a rival finds other suppliers and keeps products in stock, customers will choose them if you run out. In short, failing to act could mean losing market share that’s hard to win back.
You might also miss out on lifelines.
During recessions, governments provide support programs such as grants, loans, and wage subsidies. So, be prepared to take advantage of them.
If your books are a mess or you haven’t kept up with lenders, you might not qualify or be late to apply.
If you wait to secure a line of credit, banks may hesitate to lend when a recession hits. A business finance expert says that getting a line of credit might help remove uncertainty in the coming months.
The bottom line is that failing to prepare is basically preparing to fail. It’s way better to take preventive steps now than to scramble during a crisis.
Ways Canadian Businesses Can Prepare for the Coming Recession
1. Tighten Your Cash Flow Like a Sailor Securing Rigging
The “Cash Flow First” Rule – Why It Matters Now More Than Ever
Cash flow keeps your business afloat. In stormy conditions, prioritizing cash flow is as critical as securing your sails before a storm hits.
To survive the coming recession, they must prioritize cash flow – ensuring more money comes in than goes out each month. This isn’t just a good idea; it’s essential, since 47.5% of small business owners in Canada report that cash flow is the most significant concern.
To prioritize cash flow, track it closely, forecast finances, and make adjustments as needed. If you see a shortfall coming, take action now – line up a credit line, cut expenses, or step up collections.
Be cautious with big expenses or expansions unless you’re sure they’re a good idea. Avoid big, expensive bets that could strain your cash. Preserve your cash, and you’ll have more flexibility and less to worry about.
Cost-Cutting vs. Smart Spending – Where to Trim Without Hurting Growth
Cut costs during a recession, but avoid cutting essential expenses. Identify and eliminate non-essential costs that don’t impact revenue or customer satisfaction.
Don’t overdo it, though, and cut things that bring in money or keep your business running smoothly. Cutting marketing to zero to save money might actually hurt you in the long run.
And laying off your top salesperson will save you salary, but you’ll also lose the sales they would have brought in. There’s a difference between cutting costs and spending smart.
Smart spending means investing in things that yield high returns or keep customers happy. You can cut back in other areas.
Review your budget for areas to cut back. Negotiate with vendors or landlords for better deals. Explore cheaper alternatives for phone and internet plans. Consider switching to variable costs, like commission-based sales or outsourcing, to reduce expenses when revenue drops.
In short, cut the waste, but don’t hurt your ability to make money. Stay lean, but don’t starve your business of what it needs to survive and thrive.
Building a 6-Month Emergency Fund for Your Business
You’ve probably heard experts advise people to save 3-6 months of living expenses in case of emergencies. It’s the same for businesses – having some cash set aside is one of the best ways to weather a recession. If your income takes a hit, an emergency fund gives you time to adjust without freaking out.
So, how much do you need? A good rule of thumb is to save 3 to 6 months of your business expenses in cash. For example, if it costs you $10,000 a month to run your business (rent, payroll, and so on), try to save $30,000 to $60,000 in a savings account you can easily access.
It’s not easy, and many small businesses don’t have that much stashed away. But even saving 1-2 months of expenses is better than nothing – so start building your reserve now.
Think of it like a bill you can’t ignore: every time you have a good month, put some money aside.
If you already have some savings, take a look and see if it’s enough. Would it cover you if your sales dropped by 50% for three months? If not, try to grow it.
And if you’re sitting on a pile of cash, don’t get too comfortable – use this as a chance to prepare, not an excuse to slack off.
Also, consider an unused line of credit as a backup to your emergency fund.
If you don’t have one, now’s a good time to get a business line of credit – when your finances are looking okay. That way, if you hit a tough spot, you can use it to cover any short-term cash gaps.
Many business owners who put off getting a credit line later ended up regretting it. Getting credit set up ahead of time can make a big difference when things get tough.
Tip: Keep your emergency cash in a separate account so you’re not tempted to dip into it. And if you do need to use it, make it a priority to replenish it when things improve.
How to Speed Up Receivables and Reduce Late Payments
Slow payments can silently drain your cash flow. When times are tough, customers may delay paying you because they’re struggling too. Don’t be afraid to tackle this head-on – getting paid faster can be the difference between staying afloat or not.
Here are some ways to speed up your payments and reduce late invoices:
Invoice quickly and clearly.
Send the invoices right after the work is done or goods are delivered. Each day you wait is a day you’re lending money to your client. Make sure your invoices are easy to understand with all the right details, due date, and payment options.
Consider shortening your payment terms.
If you usually give clients 60 days to pay, think about cutting it down to 30 or even 15 days for trustworthy customers. You can frame this as a standard policy update or even offer a discount for early payment.
For example, give them 2% off if they pay within 10 days. Many clients will take that discount, which helps your cash flow.
Enforce late fees in a friendly way.
Add reasonable late payment fees or interest to your invoices. Sometimes, just knowing a fee is coming will encourage clients to pay faster.
A polite reminder on the invoice can work wonders – “Please note, a late fee of X will apply after Y days past due”.
Make paying you easy.
Use online payment solutions like credit cards, e-transfers, or PayPal to remove any hassle. If paying you is as simple as clicking a link and entering a card number, you’ll get paid faster than if they have to mail a cheque.
Yes, you might pay a small processing fee, but that’s usually way less costly than waiting months for cash.
Stay on top of collections by dedicating some time each week to follow up on overdue invoices.
Send friendly reminders before and after the due date. A quick phone call or email can do the trick – “Just checking in on invoice #123, which was due last week – let me know if you have any questions about it!”
Late payments have a real impact – 73% of small businesses say they’re negatively affected by late invoices, and about 40% say if late payments continue, their business could close within a year.
Don’t let slow payments hurt your company.
By managing your receivables actively, you keep the cash flowing. It might feel awkward to chase payments, but in tough times, you can’t afford to be shy.
Being persistent in a professional way is key.
If you have loyal customers in trouble, think about offering a payment plan. This can help them avoid defaulting. Something is better than nothing. Keeping goodwill can help save the relationship.
The main goal is to turn your accounts receivable into cash as quickly as possible, so you’re better prepared for tough times.
2. Diversify Your Supply Chains to Avoid Getting Trapped in One Route
Small businesses often rely on one supplier or route because it’s cheaper and easier. But this approach can fail during tough times like recessions or crises. During the COVID-19 pandemic, we saw supply chains break. Shipping was delayed. Businesses without inventory struggled. To survive tough times, you need to diversify your supply chains.
The Risks of Putting All Your Eggs in One Basket
Imagine being a retailer dependent on one supplier or a manufacturer relying on one component. If that supplier or country faces issues, your shelves empties or costs skyrocket. In a recession, this risk increases as companies fail and trade barriers rise.
Small businesses are vulnerable to shortages because they can’t get priority from suppliers. Big firms get scarce parts first, leaving small businesses to wait.
Service businesses need a backup plan too. Relying on one subcontractor or freelancer is a risk. If they’re unavailable, your business suffers.
In simple terms, relying too heavily on one thing can cause your whole business to come crashing down. The goal is to build redundancy and flexibility into your supply chain so you’re never backed into a corner.
Building a Resilient Supply Network for Your Canadian Business
Having a resilient supply network means you have options when you need them. Here’s how to make that happen:
Know What You Need
List the materials, products, or services your business can’t live without. Which ones come from just one source? Those are the ones you need to focus on first.
Find Backup Suppliers
Research and connect with new suppliers for each critical item on your list. These could be suppliers from different regions or countries.
They might also be local Canadian companies. The idea is that if one supplier has a problem, you can switch to another quickly.
A clothing store that imports goods may begin buying from Canadian wholesalers as a backup.
Test Your Backup Plans
Don’t wait until a disaster strikes to test your new suppliers. Try out a small order now to see if they’re reliable and meet your quality standards. This also lets them know you’re a potential customer.
If possible, start using your backup suppliers for some of your orders, so you’re not 100% dependent on one.
This strategy is called “dual sourcing” – for example, 70% from your main supplier and 30% from a secondary one. It might cost a bit more upfront, but it’s a safer bet.
Build a Safety Net
In a just-in-time supply chain, you keep minimal stock on hand to save money. But if you think a recession might cause supply issues, it’s a good idea to stock up on your most critical items.
This way, you have a buffer if shipments are delayed. Just be sure not to overdo it – you don’t want to tie up too much cash in inventory. But having an extra few weeks’ or month’s worth of supply can save the day.
Look Local
COVID-19 showed us that global supply chains can break easily. Consider using Canadian or North American suppliers.
They may cost a bit more, but they’re less likely to be disrupted. Sticking with local suppliers during a recession can also help you build goodwill and get better deals.
Make the Most of Local and Alternative Sourcing
Buying local isn’t just a feel-good thing – it can be a smart business move. Take a Toronto food distributor that usually relied on imports. When the pandemic hit, they started buying from local farms and kept products flowing. They also used the local angle to promote their brand.
Here are some ways to tap into alternative sourcing:
Join industry groups or co-ops. Network with Canadian industry groups or online forums to find new suppliers. Ask other businesses for recommendations.
Negotiate flexible deals. When talking to alternative suppliers, say you’re making a backup plan. Highlight the chance for a long-term partnership and discuss flexible terms. Be clear about diversifying to manage risks.
Look for substitutes. If a product is hard to get, can you substitute it? In tough times, customers may be flexible. For example, a cafe could try a different coffee roast or a construction company use an alternative material. Test these options now.
Keep the conversation going. Don’t forget to talk to your current suppliers too. Ask about their backup plans. A good supplier will have strategies in place. This can help prioritize your orders and keep you informed about potential issues.
3. Invest in Cost-Effective Marketing to Keep Your Brand Visible
Don’t cut your marketing budget during a recession. It’s a mistake that can hurt your business in the long run.
Instead, prioritize smart and cost-effective marketing strategies. They can yield a high return on investment.
History proves that businesses with smart marketing in recessions bounce back quicker. They also do better than those that cut spending.
You’ll capture mindshare and market share while your competitors are silent. Also, advertising rates tend to be cheaper in downturns.
Digital marketing is a smart choice. It’s often cheaper, highly targetable, and measurable.
Focus on strategies like Search Engine Optimization, Email Marketing, Social Media Marketing, and collaborations with other businesses.
These tactics can help you stay visible to your customers without breaking the bank.
Don’t give up on marketing – just tweak your strategy. Focus on digital platforms. Be specific about your target audience. Keep talking to your customers.
It’s a smart investment that’ll help your business stay top of mind and keep earning during tough times. As the old saying goes, “Advertise when times are good, and advertise even more when times are bad.”
Having a strong presence now can make all the difference between making it through and thriving later on.
Go Deeper with our Free Guide – Take the First Step Now
Download our free “Recession-Proof Marketing” eBook today, and start navigating your business toward greater resilience and long-term success.
4. Strengthen Customer Relationships to Build a Loyal Tribe
Keep your current customers happy. It’s cheaper than finding new ones, and they’ll stick with you in tough times. Build strong ties and foster a community around your business.
This will lead to repeat customers and positive word-of-mouth.
Why holding onto customers is more important than finding new ones in a recession
Keep your current customers happy and encourage them to buy more. It’s five times cheaper than getting new ones. In a recession, every marketing dollar counts.
Loyal customers are profitable, buying more over time and trying new things. They trust your quality and service, so they worry less about prices.
Take care of them and you’ll become essential to their budget. They’ll even promote you to their friends, bringing in new customers without spending a dime.
Making customers feel special to increase loyalty
When a barista knows your name and order, it feels good and keeps you coming back. Customers who feel recognized and valued show more loyalty. They are about 80% more likely to buy from a company that personalizes their experience.
Ultimately – Treat customers like partners to build a loyal base. When budgets are tight, loyal customers will keep coming back and spread the word. They’re also more forgiving if you need to make adjustments.
Spending time on customers is smart, and it doesn’t take much to boost service and start a loyalty program. This can lead to repeat business and help you through tough times.
5. Explore New Revenue Streams as Your Backup Plan
A recession teaches us to be prepared for anything. Consumer behavior changes, and demand for services or products drops. Smart businesses have a “Plan B” for revenue. They think outside their usual model and find extra income streams.
Diversifying revenue streams gives your business flexibility. If one stream weakens, others can support it. Flexible businesses adapt quickly and survive tough times.
Don’t abandon your core business, but have backup plans. Think creatively: could you sell something else, reach new customers, or monetize your expertise differently?
New streams don’t have to be huge to start. Flexibility helps future-proof your business.
In tough times, that often means investing effort into trying new things. So, how do you identify and test new revenue streams for your business?
Start by brainstorming. Take a structured approach:
List your business’s strengths and assets. What do you have that can be used in new ways? Write down your physical location, equipment, skilled staff, strong brand, distribution channels, loyal customer base, etc.
Think about your customers’ needs beyond what you currently offer. What other markets or customer segments could you serve?
Match your assets and strengths to these potential needs and markets. Some ideas will stand out. For example, a retail boutique (with sourcing products and a physical store) could start a personal shopping subscription box or sell via live streaming online.
Don’t be afraid to come up with wild ideas – you can refine them later. The goal is to generate a lot of ideas first.
Evaluate the feasibility and potential of each idea. How easy or hard is it to implement? What’s the upfront cost or learning needed? How well does it align with your brand? What’s the profit potential? In a recession, focus on low-cost, quick-to-market ideas.
Test on a small scale. Don’t launch a huge new division overnight. Run a small pilot or MVP (minimum viable product). This could mean offering the new service to a few customers and gathering feedback, or launching a limited product line online to see the response.
Gather feedback and pivot or persevere. Use metrics and customer feedback to judge if the new stream shows promise. If it does, iterate and expand it. If not, you haven’t sunk too much cost – take the learnings and test a different idea.
Remember, new revenue streams don’t have to be completely different from your main business. They can be extensions or complements.
Pay attention to what your customers have been asking for – they might give you the idea you need. (“I love your products, I wish you also offered X…” could be gold.)
Keep the new ventures manageable. You still have to maintain your core business quality. But in a downturn, some core activities might slow, freeing up capacity to experiment elsewhere.
By exploring new revenue streams, you’re adding more safety nets and potential upside to your business. This agility can really pay off in a recession, turning a tough time into a chance to innovate.
Who knows, what starts as a backup plan might just become a key part of your business’s success story down the line.
Lessons from Past Recessions
We’re all familiar with the saying “those who cannot remember the past are condemned to repeat it.”
When it comes to recessions, we’ve got plenty of past experiences to draw from – and some pretty clear winners and losers.
Let’s take a closer look at what worked for businesses that made it through past downturns and what mistakes led others to fail.
What will Set Businesses That Survive and Thrive Apart in the coming recession
Research shows that companies that come out of recessions stronger tend to share some key traits:
Companies that thrive act fast, making tough decisions quickly. They acknowledge downturns early and adapt.
They cut costs wisely and invest in what counts. They get lean without losing focus on long-term goals. They cut costs but still support research, marketing, and talent growth. Only 9% of companies thrive after a recession. These companies balance cost-cutting with smart investments.
They focus on their strengths and what customers care about most. They focus on the essential products or services. This sharpens their value proposition. Customers get a clear reason to stay loyal.
Flexible companies pivot quickly. They adapt to new models, seize opportunities, and make it through recessions.
They prioritize customers and employees. Loyalty is key, especially in tough times. They connect with others easily and provide great service. They also back their stakeholders, forming lasting goodwill.
Companies with financial cushion or access to capital have an advantage in a recession. They can make bold moves, like buying out competitors or increasing marketing efforts.
In short, companies that thrive during recessions see the challenge as both a test and an opportunity. They cut costs wisely. They invest in what makes them unique. They sta
The Most Common Mistakes Small Businesses Make in a Downturn
So, what do many small businesses get wrong during tough times? Here are the common mistakes to watch out for:
Panic and slash everything. Cutting all costs without a plan can harm more than help. It can choke future sales and hurt customer service by laying off too many staff.
Delaying important decisions. Doing nothing can be as bad as panicking. Failing to adapt to changes in pricing, offerings, or costs can be fatal. Waiting too long to cut expenses after sales drop can drain cash. If you ignore customer behavior, your business will become irrelevant.
Not keeping an eye on cash flow. Cash flow problems often arise from not monitoring cash. Giving too much credit, failing to cut back on costs, or lacking a credit line can cause trouble.
Chasing every sale, no matter what. In desperation, some businesses lower prices too much or take on bad deals, thinking any revenue is good. But selling at a loss or barely breaking even can hurt you, especially if it ties up inventory or resources.
Neglecting employees and customer experience. Cutting costs can lower employee morale and hurt customer service. As a result, employees may not perform well, and customers might turn to competitors.
Sticking blindly to the original business model. Sticking to the original model can also mean missing out on new revenue streams. Failing to adapt, like video rental stores during the recession, can lead to being left behind.
Not communicating. Some owners go quiet, not talking to suppliers, creditors, employees, or customers about what’s going on. This can breed mistrust or missed chances to get support. Not communicating with your landlord or bank can hurt you, and not marketing at all can make you invisible.
Big mistakes happen when people don’t think strategically. They either overreact or do nothing at all. Small businesses can’t afford to make these mistakes, so being aware of them can help avoid fatal moves.
What Small Businesses Did to Thrive in 2008 and 2020
Here are some successful strategies that helped during recent recessions:
Offering value for money:
In tough times, businesses succeeded by making their products more affordable. They did this by bundling, offering budget options, or highlighting cost savings. Car companies promoted fuel efficiency and financing deals in 2008. In 2020, retailers provided bulk discounts and free extras.
Going digital:
The 2008 recession boosted e-commerce. By 2020, it was the norm. Small businesses that went online in 2020 saved their revenue. Some even surpassed old sales with Shopify sites. A strong online presence protects sales from recession.
Teaming up:
Small businesses helped each other in tough times by forming local coalitions. They did joint marketing campaigns or teamed up with farms to reach more customers without spending much.
Making the most of government aid:
In 2020, Canada’s CEWS and CEBA loans helped small businesses survive. Those who used the funds to keep staff, pay bills, or upgrade tech did better than those who didn’t. Keep an eye on relief measures and act.
Focusing on top customers:
Businesses focused on their best customers during downturns, offering great service and incentives to boost revenue.
Innovating for the times:
Companies created products for recession times. Fast-food chains offered value menus and smaller portions in 2008-09. Distilleries made hand sanitizer in 2020. They adapted their products to meet new needs.
Keeping a growth mindset:
Attitude matters in business. Bold companies can grow during recessions. They do this by buying rivals or gaining market share. Small businesses can find chances too. They might buy a competitor’s client list or take over their lease. Confident businesses see recessions as a chance to act.
How EV Agency Can Help Your Business Stay Resilient
You might be thinking, “These strategies seem great in theory, but implementing them will take a lot of work. I’m already busy with my business.””
That’s where EV Agency comes in – we’re not just going to give you some tips and send you on your way. We’re here to partner with you, roll up our sleeves, and help you make these ideas happen, especially when it comes to marketing.
We’re a Canadian marketing agency. We help small, medium, and large businesses thrive, even in tough times. We get that marketing can be a smart investment when times are tough, and we’ve got the expertise to make every dollar count.
Think of us as your marketing outfitters.
Download Your Free Guide – Take the First Step Now
Download our free “Recession-Proof Marketing” eBook today, and start navigating your business toward greater resilience and long-term success.
What’s Inside the Free “Recession-Proof Marketing” eBook
We’ve put together a guide to help business owners like you: the “Recession-Proof Marketing” eBook. We’re giving it away for free. It’s a more in-depth look at some of the concepts we’ve discussed, with practical steps and checklists you can use.
What’s Inside the Free Recession-Proof Marketing eBook
Clarify Your Message, Focus on Branding – Cut through the noise with a clear, compelling brand message that attracts the right customers.
Building Financial Resilience – Learn how to market effectively during economic uncertainty and make every dollar count.
Focus on Customer Retention – Keep your best customers engaged, loyal, and coming back for more.
Diversify Your Customer Base – Reduce risk and build a more resilient business by expanding into new markets.
Empower Your Customers – Turn your audience into brand advocates by delivering value and building trust.
Lead Your Team and Entire Business – Strong leadership drives successful marketing. Learn how to inspire your team and stay agile.
Leverage Your Distinctive Value – Stand out from the competition by highlighting what makes your business unique.
Optimize Your Marketing Budget – Maximize ROI with cost-effective strategies that work, even in a downturn.
Take a Values-Based Marketing Approach – Connect with your audience by aligning your marketing with meaningful values.
Update Your Marketing Strategy – Adapt, evolve, and stay ahead of the competition with a future-ready marketing plan.
Chart Your Path Forward – Create a sustainable marketing strategy that keeps your business thriving in any economy.
Bonus: A Step-by-Step Action Plan – Practical steps you can take today to make your marketing recession-proof.
Download your free copy now and build a marketing strategy that works—no matter the economy.
Final Thoughts – Thriving, Not Just Surviving, in the Coming Recession
The Mindset Shift: Seeing Opportunity in Crisis
Embrace the upcoming economic challenge as a chance to refine your business operations, positioning yourself not just to survive but to thrive in calmer waters ahead.
Actionable Next Steps to Start Preparing Today
- Audit and optimize your cash flow.
- Diversify supply chains proactively.
- Invest strategically in digital marketing.
- Foster stronger customer relationships.
- Identify alternative revenue streams.
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Download Your Free Guide – Take the First Step Now
Download our free “Recession-Proof Marketing” eBook today, and start navigating your business toward greater resilience and long-term success.
Economists forecast a potential recession by mid-2025 due to rising debt, tariffs, and declining business confidence.
Signs of an economic slowdown appear in Canada and around the world. High inflation and aggressive interest rate hikes by central banks from 2022 to 2023 have raised recession fears.
While no one can say for sure, groups like the IMF and Canada’s major banks have lowered growth forecasts for the next year. Most agree that if a recession hits, it will likely be short and shallow, not deep and prolonged. Some areas or sectors may feel the impact more than others.
For example, the U.S. experienced a “technical recession” (two quarters of negative growth) in early 2022, but it was mild. Canada is in a similar position – if a recession occurs, it is expected to be mild due to strong employment and a stable banking system.
Bottom line: Yes, a recession is likely coming soon, so it’s smart to prepare. However, it’s not expected to lead to a severe economic collapse. Being ready can help your business navigate even a mild downturn with ease.
Tariffs could significantly affect Canada’s economy and may contribute to a recession.
Tariffs alone likely won’t cause a national recession, but they can help lead to one, especially in certain areas. For example, major tariffs or a trade war with the U.S., our biggest trading partner, could harm export-focused businesses and raise costs for importers. This can slow down the economy.
A historical case is the 1930 Smoot-Hawley Tariff. It made the Great Depression worse by limiting global trade (cnbc.com). Today, recent tariff threats, like U.S. tariffs on Canadian aluminum, steel, and auto parts, have put businesses on edge (cfib-fcei.ca).
Tariffs can raise prices for raw materials and goods, affecting both businesses and consumers. If several industries are impacted, it could worsen an economic downturn. Canada often responds with retaliatory tariffs or seeks new trade partners to reduce damage. While tariffs can be a risk that pushes a slowing economy into recession, they are usually just part of a larger issue.
For your business: If you depend on imported goods, think about contingency plans for tariffs. Consider diversifying suppliers or adjusting prices. Tariffs aside, focusing on efficiency and local markets can help reduce risk.
Cutting marketing too much doesn’t pay off. It might seem like a quick fix, but it usually hurts your business in the long run.
Companies that maintain or adapt marketing during tough times recover faster and gain on competitors.
Staying visible to customers is key – they might be lost for good otherwise. Focus on what works and ditch what doesn’t. Digital, content, email, and referrals are cost-effective options. Optimize your budget, don’t wipe it out. Even with less, creative campaigns can make a big impact.
Smaller businesses have a few aces up their sleeve during a recession. Here are some ways you can outshine big brands:
Personalized Service: Big brands often struggle to offer a personal touch. That’s where you come in. Double down on customer service, follow up with customers personally, and customize your approach. This builds loyalty that giant corporations can only dream of. When things are uncertain, people tend to favor businesses that feel like they “get” them.
Local and Community Focus: If you’re a local business, own it. Engage with your community, support local causes, and highlight how shopping with you benefits the local economy (a big plus during tough times). Large brands can seem faceless; you can be the friendly neighbor everyone wants to support.
Agility and Innovation: You can move faster than a huge corporation stuck in bureaucratic red tape. If you spot a emerging need, you can meet it before a big competitor even gets approval from HQ. Use your agility to offer new products, switch suppliers, or try new marketing channels. Big brands often put innovation on the back burner during recessions to cut costs; you can fill the gaps they leave.
Cost Efficiency: Without massive overhead and shareholders to answer to, you might naturally operate more leanly. That means you can offer better prices or value in your niche. You might not be able to beat Walmart on price overall, but you can offer specific deals, bundles, or value-adds that give customers more bang for their buck.
Authentic Brand Story: People love authenticity. Share your story – why you started the business, who’s behind it. Social media is a great way to do this. Big brands spend millions trying to seem authentic; you can do it just by being yourself. An authentic connection with your customers can win their hearts – and their wallets.
Niche Specialization: You can excel in a niche market where big brands don’t focus their energy. Be the go-to expert in your specific product or service area. Depth of knowledge and specialized offerings attract customers who want the best solution, not just a generic one. In a recession, people still spend on things they really care about. If your product hits that passion or critical need, they’ll choose the specialist – you.
In short, compete by being more human, more agile, and more customer-focused than any big competitor. Use your size to your advantage. And remember, big companies struggle during recessions too (some even cut corners or service quality to save money). If their standards slip, that’s your chance to shine by keeping quality and attention top-notch.
Retaining customers in tough times is all about building strong relationships. Here are some strategies to help:
Loyalty Rewards: Start or boost a loyalty program that rewards customers for their loyalty. When they know they’re earning perks, they’re less likely to look elsewhere. For example, try doubling loyalty points during slow months to keep them coming back.
Exclusive Deals for Loyal Customers: Before you advertise sales to the public, give your existing customers a heads-up or a special perk. Something like, “Private sale just for you: 30% off next week, plus a free gift with purchase.” This drives sales and makes them feel valued.
Flexible Options: Recognize that customers might be on a tight budget too. If it makes sense, offer smaller package options, financing plans, or payment plans. Instead of a 12-month subscription, consider offering a month-to-month option (even if it’s slightly more per month) to reduce upfront commitment. Or let them downgrade to a basic plan rather than canceling entirely. It’s better to keep them at a lower spend than losing them completely.
Clearly Communicate Value: Remind customers why your product or service is worth the investment. Highlight cost-saving benefits (e.g., “our energy-efficient appliance will save you $X on bills”) or longevity (“this jacket will last you for years”). Use customer testimonials or case studies to show how your offering solves a problem or is top-notch – just make it clear why they should keep spending on you. Customers are more likely to cut things they see as unnecessary; make sure you position yourself as essential.
Stay in Touch (even when they’re not buying): Use content and email to keep providing value even when they’re not purchasing. Share tips, how-tos, or entertainment related to your industry. When they’re ready to spend again, you’ll be the first one they think of. A salon that had clients spacing out visits could email DIY hair care tips in between appointments – the client saves money short-term but is likely to return to the helpful salon when able.
Go the Extra Mile with Customer Service: This is huge for keeping customers. Respond quickly to inquiries or issues, add a personal touch to orders, and make every interaction positive. When customers have a good experience, they’re much less likely to leave – even if competitors try to lure them with discounts. People remember how you make them feel.
Ask for Feedback and Show You Care: Ask customers how you can serve them better in tough times. Use surveys or informal check-ins. If possible, implement their suggestions. When customers see their feedback lead to action (like a new product, improved packaging, or adjusted store hours), they feel invested and loyal. They know you genuinely care.
It’s all about building strong relationships. If customers feel you truly care about helping them (not just taking their money), they’ll stick with you even when their budgets are tight. It’s like personal relationships – be understanding, supportive, and valuable, and the relationship will weather the storm.
Not necessarily. Launching during a recession might seem counterintuitive, but it can actually be a smart move. If your new product addresses a real need or offers strong value in today’s climate, it can give you a head start on growth when the economy recovers.
Think about it this way:
If your product helps customers save money, improve efficiency, or offers affordable escapism, it could do really well. People still look for small joys during tough times, so entertainment and comfort products often do okay. If your launch solves a pain point made worse by the recession, it might be perfect timing.
With less competition, your new product might get more attention than it would in a booming market. You can capture unmet demand and take advantage of lower advertising rates. Media outlets might also be looking for positive business stories, so a new launch can attract press interest.
Even if your product won’t have huge demand right away, you can use this time to test and refine it. Get feedback from early adopters, who tend to be the most enthusiastic, and make adjustments. Then, when the economy improves, you can do a bigger push with a well-optimized product.
Many successful companies were founded during recessions. Think of WhatsApp, Uber, and Airbnb, which all started around the 2008-2009 recession. They identified new ways to meet needs during tough times, and that paid off.
Don’t over-leverage to launch your new product. Keep costs manageable and roll it out gradually if needed. If you’ve done your homework and your product is necessary or very useful to your target customer, they will buy it, even in a recession. Just be mindful of launching something luxury or discretionary to a segment that’s really hurting.
If you’re solving a relevant problem, it’s not a bad time to launch. Do some market validation first – pre-sell, gauge interest via a survey, or try crowdfunding. If the response is positive, go for it. Just make sure to frame and market your new product in a way that shows how it helps in current conditions. And if you have the resources to launch without neglecting your core business, it can be a bold move that pays off.
Marketing on a tight budget is all about making the most of what you’ve got. Here’s how to do it:
Focus on free (or super cheap) channels. Use social media, content marketing, SEO, and email marketing to your advantage. These tactics take time, but not a lot of money. For example, writing a helpful blog post each week and sharing it on social media can drive traffic to your site.
Leverage your network. Word-of-mouth is powerful and free. Encourage happy customers to spread the word, and consider offering a referral incentive. You can also team up with other business owners to cross-promote each other’s services. Join local community groups where you can mention your services without being too salesy.
When you do spend on ads, make it targeted. Use Facebook ads or Google search ads to reach people in your area who are actually looking for what you offer. Set a small daily budget and track the results. This way, you know you’re reaching people who might be interested in what you’re selling.
When possible, DIY. Use tools like Canva or Mailchimp to make designing and marketing easier. If you or someone on your team can handle tasks like managing social media or updating your website, you’ll save money. If you’re missing a certain skill, consider bartering with another professional.
Repurpose your content. Turn one piece of content into multiple social media posts, an email newsletter, or even a video. This way, you’re maximizing your reach without having to create new content all the time. You can also turn customer reviews into social proof posts or case studies.
Get involved in your community. Local media often gives free coverage to businesses that are doing something interesting or helping out. You can also send a press release or invite a reporter to an event to get some free publicity. Just make sure you’re doing something noteworthy.
Keep an eye on what’s working and what’s not. If something isn’t yielding results, cut it. Use tools like Google Analytics to track what’s driving traffic to your site. This will help you make smart decisions about where to allocate your budget.
Consider co-marketing with another business. You can split the cost of a mailer or share a booth at a local fair. This way, you’re getting more bang for your buck.
Use your email signatures and invoices to your advantage. Add a line or banner about a current promotion or new product to every email you send or invoice you issue. It’s free marketing that reaches people you’re already in touch with.
The key is to be scrappy and creative. Focus on building relationships and creating content that resonates with your customers. With a little bit of effort, you can make a big impact even on a reduced budget.
Preparing Your Finances for a Recession
Getting your finances in order is the most important thing you can do to get ready for a recession. Here’s a checklist to help you prepare:
Build Up Your Emergency Fund: Try to save 3-6 months’ worth of expenses in an easily accessible savings account. If you don’t have that much, start setting aside some money each month. Even having 2-3 months’ worth of savings is better than nothing. Treat it like a priority bill and make saving cash a habit.
Get Your Credit in Order: Don’t wait until you desperately need money to apply for credit. Talk to your bank about a business line of credit or increasing your credit limit now, while your business is still doing okay. You might get better terms if you apply before things get tough. Remember, you only pay interest on what you use, so having access to credit can be a lifesaver.
Cut Back on Expenses: Go through all your expenses and sort them into three categories: essential, could-reduce, and discretionary. See where you can cut back on non-essential expenses, like unused subscriptions or travel costs. Be careful not to cut costs that directly affect your revenue, like marketing or key staff. And don’t be afraid to negotiate with vendors – many will offer better terms if you ask.
Manage Your Debt: Take a close look at your debts and see if you can refinance any loans to a lower interest rate or longer term. Pay down any high-interest debt, like credit card balances, as aggressively as you can. But don’t use up all your savings to do it – find a balance. If you’re struggling to make payments, talk to your lenders and they may offer interest-only payments or other relief.
Keep an Eye on Your Cash Flow: Create a simple cash flow projection for the next 6-12 months, including expected revenues and expenses. This will help you see if you’re going to have a cash crunch and plan accordingly. You can adjust your spending, inventory levels, or payment terms to avoid negative cash flow months.
Tighten Up Your Credit Policy: If you invoice customers, try to get them to pay faster by offering discounts or shortening payment terms. Keep a close eye on overdue accounts and chase them diplomatically. You can’t afford to be too laid-back about getting paid.
Manage Your Inventory: If you have inventory, try not to overstock on items that might slow down during a recession. Excess inventory ties up cash, so it’s better to lean towards a “just in time” approach. But if certain supplies might get more expensive or scarce, consider buying a bit extra as a hedge.
Make a Financial Contingency Plan: Decide in advance what costs you’ll cut or postpone if revenue drops by 20%, 40%, or more. Having a plan will help you act swiftly and calmly if things get tough. Consider what you’d do personally, too, like cutting back on your owner’s draw.
Get Your Personal Finances in Order: Make sure your personal credit is healthy and you have a personal emergency fund. If you need to, consider securing a home equity line of credit as a backup to inject personal funds into the business. But don’t take on new personal debt or expenses if you think you might need financial flexibility to support the business.
Stay Lean but Capable: It’s not just about cutting costs – consider where spending a bit now could save you more later. For example, upgrading old equipment might reduce maintenance costs and improve efficiency. If you find a good deal on something that will pay off in cost savings within a year, it could be worth it even in a recession.
By following this checklist, you’ll be better equipped to withstand lower revenues and unexpected expenses. It’s like building a financial safety net. And don’t forget to communicate with your stakeholders – if you foresee trouble, talk to your bank, landlord, and suppliers. They may be willing to work out a deal if you have a good track record.
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