The Great Depression of the 1930s, the financial crisis of 2008 and now the COVID-19 pandemic. In times of great economic hardship, companies are forced to make tough decisions. Companies resort to cutting their costs as the first step. This happens to both small and large companies, but especially to SMEs that do not have extra capital in reserve. It may be absolutely necessary to reevaluate your business and cut things that are not essential at this time. Many business owners find that marketing is such a thing. The idea behind it is simple: Fewer people buy, which means you do not have to invest as much in promoting what you are selling. The reality is not so simple. Experience and research show that it can backfire and create more problems than it solves. 

According to studies by Roberts (2003) and Hiller (1999), companies should invest aggressively in marketing during an economic recession. Both studies show that companies that continue to invest in marketing, and perhaps even spend more money than before, perform almost as well in a crisis as they did before. They also emerge more easily on the other side of the crisis. 

In the same vein, Srinivasan et al. (2005) explain how companies that invest in marketing during recessions not only perform better after the crisis, but also receive immediate returns. 

There are many similar success stories that show how marketing can help make the best of a bad situation, but as a small business owner, you're probably wondering if this applies to you too. The answer is yes, it does. In fact, the smaller the business, the more likely it is to pay off.

An opportunity for small and medium-sized businesses 

Getting noticed and attracting customers has always been a problem, especially for small and medium-sized businesses that don’t have large marketing budgets. When the economy is doing well, many companies are fighting for consumer attention. It can be far too expensive and difficult for smaller businesses to cut through the crowd and get noticed. In times of crisis, many companies cut their marketing budgets, so it’s a good time to invest more yourself – this is where you can be seen and heard as a smaller business.

The advantages of being small 

In addition to less competition, small businesses also have something else that large companies do not have – flexibility. When there is a recession, consumer patterns, priorities and preferences change. For example, consumers can buy less, but for the same amount of money. Their priorities shift to essential products and services. Just like companies do, consumers reevaluate their habits, cutting out many things that are not essential or necessary. Companies must be willing to adapt to these changes if they do not want to end up in the category of “unnecessary” things. You may only need to change the way your company communicates your products, but it may also be that the product itself needs to be changed to match consumer demand. In larger companies, there are complicated bureaucratic structures that make it difficult to change communication and products. Therefore, they are slower to adapt to the market. Small and medium-sized companies are more flexible, and can more easily make decisions that will get them through a crisis.

Prepare for success when the economy improves 

Some business models and industries are harder to adapt than others. It can be difficult to act quickly and take control of the situation, but doing so not only protects your place in the market – it can also make you extra competitive when the economy turns around. Consumers can limit their consumption in many ways, but they do not limit the amount of information they absorb. Companies that continue to communicate and engage during a downturn stand stronger and grow faster when consumption picks up again.

Don't hesitate. 

Businesses often believe they can “wait until the economy improves” and simply pick up where they left off. This approach can be extremely expensive. Instead, small and medium-sized businesses should use this opportunity to make consumers aware of them, which is also cheaper when the economy is down and turning. The economy goes up and down, and it is the companies that can adapt and dare to act that are successful both during and after a crisis.