How Can Small Businesses Survive the How Can Small Businesses Survive the Recession

How Can Small Businesses Survive the Recession

How Can Small Businesses Survive the Recession | Practical Examples?

Recession is the reduction in economic activities impacting the GDP in negative ways. It results in lower consumer spending and an increased unemployment rate, resulting in small businesses getting badly affected by this economic downturn. In this brief article, we’ll discuss how can small businesses survive the recession. 

How Can Small Businesses Survive the Recession

Let’s discuss how can small businesses survive the recession;

Reduce Expenses

As consumer spending reduces significantly during a recession, it affects small business sales, resulting in lower profits. That calls for lowering your costs to keep equilibrium in incoming and outgoing money. 

Some aspects that may be cut down are deciding to let go of poorly performing employees, negotiating utility rates, finding cheaper vendors, and cut-short technology or software costs if feasible. You can become a business that thrives in recession by employing these cost-reduction strategies successfully. 

Develop Strong Relationships

If you treat your partners and customers well and deal with their concerns sincerely, they will stick with you even during recession periods. One effective way to understand your customers is by conducting surveys and asking for feedback post-purchase.

Another way to impress your customers is by offering them affordable payment plans, as the majority of them may not be able to afford complete advance payment. 

Cash Reserves and Funding

A cash reserve is instrumental to your business operations when a recession strikes. It eliminates the need to borrow loans and helps you better manage expenses like employee paychecks and utilities. You should have a cash reserve to meet at least 6-12 months of ongoing costs. 

Alternatively, if you don’t have some cash, other options to consider are applying for loans or grants. However, securing a loan is more of a pre-planning choice because during recession periods, interest rates double. The chances of receiving a loan for a struggling business also reduce significantly.

Improve Operational Efficiency

You must have seen examples of large companies laying off employees at a massive level just a year ago. Small businesses also rely on downsizing, following the footsteps of giant companies. However, it’s not the recommended step. In the aftermath of an economic downturn, rehiring and training costs of employees may be more than retaining previous employees. 

The alternative step should be improving your operations strategy. Investing in technology accessible at a lower cost than normal times positively affects the business. Automating and streamlining business operations result in heightened productivity and more revenue. 

Case Studies of Companies Surviving Recession

According to several studies on great recessions, 10% of companies survive and thrive during recessions, with revenue margins soaring. The majority of companies were either acquired, went bankrupt, or turned private. 

Two companies that performed really well during the recession are the tech giants Mailchimp and Netflix. Let’s have a look at how they survived and thrived during the recession of 2008.

How Can Small Businesses Survive the Recession - business


Mailchimp is the email marketing software, one of the biggest names in the industry, which was launched 20 years ago. It surfaced during the economic crisis of 2001. Starting a business during a recession is an intimidating idea. Still, Mailchimp faced the challenge and sustained its growth since then. 

During the recession of 2008, it completely changed its business model to freemium, which attracted a large percentage of customers to join Mailchimp, resulting in growing sales afterward. Making quick decisions and changing its model was the strategy that proved instrumental in its growth.


If you’re finding “How Can Small Businesses Survive the Recession,” Netflix can be a perfect example. Netflix leveraged technology advancement and worked on customer experience to thrive during the economic downturn. In 2008, it introduced its product, “video streaming.” It partnered with Xbox to provide excellent service to its customer base, skyrocketing memberships and subscriptions. 


We discussed how to prepare your business for a recession by employing various strategies. It’s crucial to understand how can small businesses survive the recession to enhance their life span. Neglecting to prepare for an economic crisis and failing to adjust during difficult times can prove detrimental to your business.