I started CRAVEBOX in 2014. CRAVEBOX assembles and sells gift snack boxes and baskets. It’s August 2022 and the US has just had its second quarter in a row of GDP decline. This is a common definition of recession. CRAVEBOX is definitely feeling a softening of consumer demand, especially since online snack purchases surged during the pandemic and now things have returned to normal purchasing behavior. CRAVEBOX is also facing increased competition from large manufacturers like Frito Lays and Mondelez International. These combined forces have made the past 2 years a difficult environment but I’m ready to lead CRAVEBOX through these times and come out ahead when demand improves again. I’ll accomplish this by using the lowest-cost suppliers, cutting redundant staff, and improving our current products.
Use Lowest-cost suppliers
As demand weakens, especially in this inflationary environment, it puts a lot of pressure on all businesses. If I’m feeling pressure in my category, I can rest assured knowing all my competitors are feeling the same pressure. The key in this difficult environment is to adapt and survive better than the competition. So, with decreased demand, sales are down. With inflation and increased costs, profit margin is also down. This makes for a very difficult situation – since sales and profit margin are both decreased, total profit or income is significantly decreased. This combination of factors is enough to force some businesses into bankruptcy. To avoid having to close down, it’s critical to cut costs and one of my biggest costs is COGs. I can decrease costs by ordering from my lowest-cost suppliers and looking for new, lower-cost suppliers. This will help to keep costs down, keep my prices to consumers down, and hopefully keep sales as high as possible.
Cut Redundant Staff
When times are good and you’re growing as a business, it makes sense to hire more staff and sometimes add some redundant staff. This makes sense because as you grow, you need to have plenty of time to focus on those high growth areas and you don’t want to be pulled back into completing operational tasks that aren’t related to growth. Redundant staff is helpful in these circumstances because if someone is sick or needs to take off for an extended period, the redundant staff will be able to fill in and you can continue working on growth initiatives. But when a recession hits, when demand slows, and growth flips upside down, it’s no longer attractive to have that redundant staff. You now need to change gears and focus on saving money. This means cutting certain staff and maybe performing operational roles yourself at the expense of growth.
Improve Current Products
When sales are down, profit is down, and times are generally tough, it’s important that you survive so your business can exist when times become good again. Many businesses make the mistake of experiencing a downturn and immediately taking risk to try new products or pivot. The problem with such a hard pivot is that it often requires risking money that you don’t really have to risk. Just because the business is not performing at its peak, doesn’t mean you give up on it and try to start something completely new. It’s important in this situation to double down on your core products, make them better, and differentiate them further from your competition. It’s likely if you can do this, many of your competitors will either go bankrupt or become distracted trying to pivot out of the recession, and in the end you will emerge with a larger market share, better products, and a stronger business.
About John Accardi
John Accardi is the founder and CEO of cravebox.com. CRAVEBOX assembles care packages and gift baskets to be sold online. John dropped out of a PhD program at Georgetown University in 2014 to start CRAVEBOX and he says it’s the best decision he ever made. CRAVEBOX is located in North Wales, PA and John lives in Manhattan. John likes to invest in stocks and rental real estate. When John’s not working, he enjoys sailing, playing guitar, and spending time with family.