How SMBs Can Survive (and Thrive) in a Tough Economy

The Reality Check: SMBs Need to Adapt or Struggle

Economic uncertainty isn’t new—but for many small businesses, it feels more pressing than ever. Costs are rising, hiring is a challenge, and competition is fierce. Survival isn’t about being the biggest—it’s about being the most adaptable.

But here’s the challenge: Change is hard.

Employees often struggle when asked to do things differently. New systems, new processes, and even small shifts in job responsibilities can create resistance. As leaders, our job isn’t just to implement change—it’s to help employees navigate it.

I’ve seen this firsthand. When we introduced new systems into our business, I naturally expected some pushback—but what I didn’t expect was how deeply some employees were tied to “the old way.” They weren’t resisting the system itself—they were resisting the loss of familiarity, control, recognition and comfort.

What I also saw was that employees took great pride in their work. Many were learned experts, recognized internally and appreciated by customers for their expertise.

When the business changed, I had a choice—force the transition and risk losing their expertise, or find a way to integrate their institutional knowledge while adapting to new ways of doing business.

Instead of letting go of people who didn’t fit into their new roles, I focused on bridging their expertise into positions where they could still create value. Some employees moved into leadership roles—and some of those transitions didn’t work out. My options were to fire and move on, or strategically reshape roles to retain their knowledge while aligning them within the new business needs. That choice made all the difference.

How do SMB owners balance financial discipline, growth, and employee retention—without losing key people in the process?

Let’s break it down

Cut Costs Without Killing Growth

During economic downturns, many SMB owners panic and cut expenses aggressively. The problem? Cutting the wrong things stunts growth and creates a downward spiral.

🚨 Common Mistakes:

• Slashing marketing & sales budgets—just when you need them most.

• Cutting team incentives & benefits, leading to disengagement.

• Delaying leadership investments that keep the business strong.

  
  

💡 The Fix:

Instead of across-the-board cuts, focus on strategic efficiency:

✔ Optimize workflows & remove inefficiencies (wasted time = wasted money).

✔ Automate repetitive tasks to free up employees for high-value work.

✔ Keep investing in revenue-generating activities (sales, marketing, client relationships)

Know When to Hire, When to Hold, and When to Let Go

During uncertain times, SMB owners hesitate to hire—but the truth is, hiring doesn’t stop, it just changes.

🚨 The Challenge:

• Hiring the wrong person is costly.

• Holding onto underperformers hurts morale & productivity.

• Layoffs create fear and instability within the team.

  
  

💡 The Fix:

✔ Hire for high-impact roles (positions that directly drive revenue, efficiency, or customer retention).

✔ Support existing employees through upskilling—help them grow into new roles instead of defaulting to layoffs.

✔ If letting go is necessary, do it strategically & humanely—clear communication prevents unnecessary panic.

Leading Through Change: Managing Employee Resistance

Here’s the thing about change: Most resistance isn’t about the change itself—it’s about fear of the unknown.

🚨 Signs Your Team Is Struggling with Change:

• Employees cling to old processes, even if they’re inefficient.

• Productivity dips because people are uncertain about their new roles.

• Team morale drops as people resist, complain, or disengage.

  
  

💡 The Fix:

Help employees embrace the new and let go of the past.

✔ Communicate the ‘Why’ – People fear change less when they understand the purpose behind it.

✔ Involve Employees in Solutions – Give them ownership in adapting new processes.

✔ Support, Train, and Guide – The best way to retain employees during transitions is to lead with clarity and confidence.

I've had employees who struggled with change, not because they weren’t capable—but because they didn’t see where they fit in the future of the business. (Leadership Moment) - Once I started communicating better and involving them in the transition, they shifted from resisting change to leading it.

Final Thoughts: SMBs That Adapt, Win

A tough economy doesn’t mean stopping growth—it means getting smarter about it.

✔ Cut strategically, not reactively.

✔ Hire wisely, upskill intentionally, and retain the right people.

✔ Lead change with clarity—because employees need guidance, not confusion.

📌 Is your business positioned to thrive in uncertain times?

I help SMB owners navigate hiring, leadership, and strategic decision-making—so they can adapt, grow, and build strong businesses no matter the economy.

📩 dotys@odysseyexecutivecoaching.com