A recession can make small business owners feel vulnerable and unsure. Sales dip, customers pull back, and planning gets tricky. But plenty of small businesses in Alberta have made it through tough times before. Some have even come out stronger.
The key to riding out an economic slowdown is knowing when to adjust, where to focus, and how to make the most of the supports that are available.
How a recession can affect small businesses
During a recession, people and businesses tend to cut back on spending. Customers might tighten their budgets, delay big purchases, or choose lower-cost alternatives.
Realistically, your business could face:
- Reduced sales and lower revenues, especially if you provide non-essential goods or services
- Cash flow challenges, especially if sales dip or your clients take longer to pay
- Supply chain disruptions that delay delivery or increase costs of your materials or inventory
- Rising interest rates, making it more expensive to borrow
- Unpredictable demand, making it difficult to plan.
Plan to stay strong by being strategic
A strategic approach to managing the challenges you’ll face will be key to getting through them successfully.
Cut costs—not corners
When sales slow down, it becomes even more important to keep a close eye on your spending. But cutting too deep, or in the wrong places, can make it harder to bounce back later.
Smart budgeting starts with clarity. Get a clear picture of where your money is going. Then look for ways to reduce or delay costs that are not essential.
Here are a few simple ideas:
- Talk to your suppliers, landlord, or service providers. They might be willing to renegotiate terms of existing agreements if it means keeping you as a customer.
- Take a fresh look at how your business operates. Are there tasks you could automate or outsource to save time and money?
- Revisit your inventory strategy. Could you cut back on overstocking, or offer pre-orders to help with cash flow?
Cutting costs should never mean delivering less value to your customers. If anything, downturns are the time to double down on quality and service to stay competitive.
Focus on keeping your existing customers happy
It’s more cost-effective to keep your existing customers than to find new ones, especially in an economic downturn. When people are spending more cautiously, they tend to stick with the brands they trust.
There are many ways to build trust, including:
- Keep in touch with regular, helpful updates through email, social media posts, or in-person contact.
- Offer loyalty discounts or special bundles for returning customers to show you appreciate their support.
- Ask for feedback and act on it. This shows that you value your customers’ opinions and are continuously looking to improve.
- Go the extra mile with service. This could mean using flexible return policies, sending hand-written thank you notes, or remembering your customer’s specific needs or preferences.
Long-term customers become your best advocates. And in times like these, positive word-of-mouth can be more powerful, and is more cost effective, than any ad campaign.
Diversify your revenue streams
One way to recession-proof your business is to spread out your income sources. This way, if one product, service, or client type slows down, you won’t be left scrambling. Depending on your industry, branching out might mean:
- Adding subscription services—Could you offer a monthly package, maintenance plan, or members-only service?
- Creating digital products—Templates, courses, how-to guides, and e-books are all ways to turn your expertise into income.
- Selling through new channels—Consider online marketplaces, delivery apps, or pop-up shops to reach new customers.
- Offering related services—For example, a café might expand into catering or meal kits; a wellness coach might offer one-on-one virtual sessions or group workshops.
- Partnering with other businesses—Can you bundle your services or reward businesses in similar fields for making referrals?
Listen to what your customers are asking for, or what they’re struggling with. Your next revenue stream might come from solving a problem they’re facing.
Shift to lower-cost marketing strategies
When budgets are tight, traditional advertising might not make the cut. But that doesn’t mean you stop marketing. You just get more creative.
Here are some affordable options with a high return on investment:
- Email marketing—This is still one of the most effective ways to keep your audience engaged.
- Organic social media—Share behind-the-scenes stories, customer testimonials, and useful tips with your followers.
- Partnerships and cross-promotions—Team up with other local businesses to expand your reach.
- Content marketing—Offer valuable how-to advice or insights on your website or blog.
- Local media outreach—Small newspapers, radio stations, and community blogs are looking for content and may be open to profiling your business.
These low-cost strategies can build trust and keep your name top of mind. It’s about helping your customers stay loyal.
Seek financial help early—and manage debt carefully
If you think you will face a cash crunch, don’t wait until things get urgent. Reach out to lenders, funding programs, or financial advisors early to explore your options.
If you already carry debt, be proactive. Talk to your lender about restructuring or extending repayment timelines. Keeping lines of communication open can protect your credit and your reputation.
Check out the Government of Alberta’s small business resources page for information and links designed specifically to support your business.
Adapt, innovate, and stay flexible
Economic recessions can accelerate change. That may sound scary, but it can be a huge opportunity if you’re ready to try something new.
Innovation doesn’t have to mean coming up with a whole new product or process. It could involve adopting more efficient technology, like existing online booking tools or inventory software. It might mean automating repetitive tasks such as invoice follow-ups or order confirmations. Or it could involve shifting your business model. Say, for example, a restaurant pivoting to delivery, or a retail shop adding e-commerce options.
If your business can respond quickly to changing needs, you’ll be in a better position than your competitors who try to wait it out.
Lean into smart strategies and available supports
Running a small business in a downturn is challenging. But you don’t have to face it alone. There are resources, communities, and tools in Alberta designed to help businesses just like yours adapt and grow.
There are many resources available to help you plan and adjust
Albertans are no strangers to a swinging economy and the related small business challenges. Check out the following resources that are in place to help:
- Business Link Alberta offers free advice and resources for small business owners.
- Alberta Innovates supports businesses developing new products or technologies.
- ATB’s Entrepreneur Centre can help with financing and business planning.
- Futurpreneur Canada’s Alberta office offers loans and mentorship to entrepreneurs aged 18 to 39.
- Prairies Economic Development Canada supports rural, Indigenous, and other underrepresented entrepreneurs.
Reach out early if you think you’ll need help. The sooner you explore your options, the more time you’ll have to make a solid plan.
Economic recessions come and go. But the habits you build, the systems you strengthen, and the relationships you nurture now will help your business thrive in any economy.