11 Tips to Help Your Business Survive a Recession
MELINDA HARCOURT
March 22, 2020
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Hi guys, today we’re talking about recessions. How to build a business that will see you through a recession and some tips to help your business survive a recession. Most people are terrified of them; especially business owners. People hate change in general. Yes, a recession can wipe out a business and your savings, but today, I’m going to bring you a perspective on recessions that you won’t hear anywhere else. What goes up must come down; sometimes when things are going good, we forget what it feels like when things aren’t as easy. But it’s all a cycle.
What is a Bubble?
A bubble is an economic cycle characterised by the rapid escalation of asset prices followed by a contraction. As a wedding photographer, I know that weddings are in a bubble that is just about to pop. Here’s how I know; in 2013 the average Australian wedding cost around $25,000. In 2020, the average wedding costs $65,482. That’s an increase of 260% since I’ve been a wedding photographer. This is one of the main reasons why I’ve been moving towards education. During a recession, people move away from luxury and towards skill-building. Everyone will be affected in some way, but it’s not necessarily a bad thing. It’s a natural cycle. People with the most knowledge will rise to the top.
Recession as Opportunity
A recession can be the single biggest opportunity for you to get ahead. Don’t be scared of them. There is a lot of wealth to be made in recession times and there’s opportunity in all markets. Personally, I have a lot to lose in this coming recession, so if anyone should be scared it’s me. But I’m actually really excited. Right now, everything is expensive and ballooning. A recession gives all the underdogs a leg-up. Yes, I’m scared of losing a lot, but I’m excited to see the adventure it leads me on.
Having said that, I always say don’t leave anything to luck. Be intentional. Set up your business so that it has the best chance to survive during recession.
Questions to Ask Yourself
Here are some important questions to ask yourself; please be honest when you answer them. How long right now can you last without any income at all? How much does it cost you to run your business week-to-week? How much are your personal living expenses and are you living within your means? Do you put business or personal expenses on a line of credit? When a recession hits, you need to answer these questions and understand the fundamentals of your business.
Here’s How to Help Your Business Get Through a Recession:
1 – Card Expenses and Tracking All Outgoings
Having debt is the fastest way to run down your business. A line of credit is not your money – it’s a liability. Debt puts your whole business at serious risk. I don’t have credit cards or personal loans. It took me a long time to get there and it’s hard to achieve but for me it’s an important step to make my business recession-proof. How long can you sustain your business if there are no jobs coming in? Where can you save some money? Once a year, I cancel my debit card and see which emails come in. This gives me a better idea of how much I’m spending on subscription services. It also gives me the choice of asking if I really need the service and cancelling it if necessary.
2 – Get Innovative
During a recession, you need to get more innovative and creative than your competitors. This applies to all aspects of your business. Don’t stay still or you’ll get out-innovated by people who are rising to the top. Experimentation is important because a recession brings in a new market. Understanding your new market is crucial. It will help you stay innovative and creative. Get out of your comfort zone and hit the ground running.
3 – Add Value, Not Price
People don’t want to pay a lot in recessions. Landing a job over a competitor will usually come down to price. Moving your prices down or up isn’t usually a good idea. Instead, add value. Do something that other people aren’t doing. Look for any way in which you can add value to the services you provide.
4 – Staff
As an employee in 2020, you have more rights than ever before. As an employer, it’s becoming increasingly harder to create a work environment that everybody’s happy with because everyone can go out and hustle for themselves. You have to give employees a purpose-driven role. It can be a hard line to tread. You want to look out for your staff and your business at the same time. I also think that staff need to look after their employer. Talking things through honestly with your staff is always a good idea. During a recession, the workforce becomes more competitive because of business closures. It can be a great time to hire talented people.
5 – Don’t Stop Learning
When times get tough and work gets scarce, keep learning. That’s going to be the difference between you and somebody else. The reason I’m excited about the upcoming recession is because I have this well of knowledge that I’ve been building up. The money doesn’t disappear during a recession, it just changes hands. You need to prepare yourself with education so you can be part of that transferral and not a casualty. There are loads of ways to educate yourself: never stop learning.
6 – Diversify
Look at offering products and services that have a quick return on investment. Offer things that you don’t usually do, or maybe that you don’t necessarily want to. You have to get a bit scrappy in the face of a recession. I don’t allow pride or ego to get in the way of my business. People are afraid of looking like a failure, but you have to learn to adapt at all times.
7 – Get Creative
When you’re in a recession, you won’t have a lot of money on hand for marketing or for growing your business in general. You need to get creative with your message and your brand. What you will have is time. Put more time into getting your brand seen and visible. Do it in creative and innovative ways that will make you stand out.
8 – Scale Back
Scale back your services or products and think about offering services that have a quicker return on investment. You don’t want stock sitting on your shelves. You want cashflow during a recession. You don’t want to be relying on credit during a recession. Reign your business in and rely on the core of your brand. Start growing slowly from there.
9 – Don’t Cut Back on Marketing and Education
In recession times, you can get a leg-up on your competitors through creative marketing. You can also do it through education by understanding money and cycles. These things will help your business and your mindset. They will also help you prepare for the future. Scale back on everything – but these two things would be my personal advice.
10 – Negotiate Better Deals with Suppliers
If you’re a product-based business, it’s time for people to get competitive. You can negotiate anything, from interest rates to your phone bill to your property rent. Work out how you can save money in all facets of your business. In a recession, every dollar means something. You should try and make every single dollar have the biggest impact possible.
11 – Use Your Savings to Invest in Your Business
Once you’ve applied the ten previous tips, pour your savings into your business and fuel growth. There’s no better time to be investing. There’s an old saying, ‘don’t buy until there’s blood in the streets’. People often think recession means the end of everything and the markets will never recover. But it will always turn around. Everything is undervalued in a recession. There are many bargains to be found. Your goal is long-term investment. In the future, there’s a high chance you will make your money back, plus more. Do the opposite of what everybody’s doing.
You can’t be attached to what you have, because we have nothing. You have to know when it’s time to let go and pass it on. In life, everything is in motion. It all comes and then it all goes. Allow things to move around and be thankful for it. With this mindset you don’t need to fear a recession. I love change because it’s where life gets exciting.
Thank you so much for listening guys. If you know of someone who’s worried about the upcoming recession, please feel free to share the podcast around! See you next time.
Episode Sponsor
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