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Economic recession has always been an unwanted guest in the business environment. It sneaks up on you with no warning, and you can never know when it’ll pack its bags and leave. A recession is the time when profits take a nose dive, millions lose their jobs and the prices of products and services soar.
Related: Prepare for a Massive Recession
This may sound like a shock, but just the way you have businesses that go bankrupt or struggle to break even, there are businesses that make millions during the recession. Companies like Procter & Gamble, Macy’s, Netflix and a host of others defied the hopeless norm of economic recession and thrived through it and are still going strong.
What makes them different from the businesses that fail during a recession is that they viewed the scenario with a different perspective. When you capitalize on these differences, you too will also be able to not only survive but thrive through the recession.
1. Leverage an urgent consumer need.
“Recession does not mean that the people suddenly stop spending money,” said Will Rees, director of Worktop Express. “Price comparison certainly becomes higher up the agenda, but people don’t buy on price alone. In my opinion, there is a real shift in priority towards value, during a recession. The consumer will carry out a fair degree of research — and will usually choose to purchase the item that represents the best compromise between price and quality.”
For instance, plastic credit cards were created to deal with the problem of fading cardboard credit cards. Airbnb came about as a new way to face the issue of expensive lodging, and it’s still doing well. For similar reasons, companies like PayPal, 2Checkout and TransferGo are also still thriving: they solve the funds-transfer problem.
2. Source capital from investors.
If you have a promising project or business model, pitch your business idea to an investor. The objective is to solicit enough funds to get the business up and running and unleash its full potential to hit it big in the market.
In the words of Matthew Tagliavia of Fund an Idea, “Angel Investors and venture capitalists are always on the look-out for promising businesses that have the potential to give high returns on investment.
“Depending on the type of investors you go for,” Tagliavia continued, “you have the opportunity to gain access to business advice, and insights or hands-on involvement in the growth of the business. Venture capitalists, however, play a more active role in your business, as they lend you their expertise and direct you on what you should do.”
3. Invest in personal and business development.
When facing past recessions, the difference between those who stayed afloat and those who soared was usually in how open they were to new innovations or new ways of thinking. Reading books and going for seminars or trainings are non-negotiable factors for running successful businesses. One characteristic most successful entrepreneurs have in common is that they are voracious learners.
How exactly does this help you thrive? Well, books are repositories of knowledge, and business is a phenomenon that has been around almost as long as we humans, so there are always great books out there.
Among my favorite business books are David Chilton’s The Wealthy Barber, which deals with personal finance management. Then there’s Nesta Bhushan’s, Emotional Grit, which, in addition to being a page turner, teaches great lessons about handling yourself amid the chaos and principles of business leadership.
Recession is never an excuse to allow the quality of your business to wane. Developing yourself and your business makes you stand out from your competitors.
4. Find creative alternatives.
During the 2008 recession, companies were closing down their branches due to the cash crunch. Macy’s took a different path — it took to creating virtual stores on the internet where customers could buy products from the convenience of their homes. Other companies, like Ford, Alaska Air and VW, also found creative alternatives.
Coming up with convenient, innovative and cost-effective alternatives will make your business more attractive to consumers. This is because during a recession, consumers look out for better deals.
5. Don’t slow down on advertising.
As funds start dwindling, companies start reducing advertising budgets. Although this helps them cut costs in the short run, in the long run they start losing relevance in the eyes of the public and are soon forgotten.
More customers patronize the heavier advertisers because that advertising builds trust in the minds of their customers that those businesses are stable.
This was how Procter & Gamble was able to thrive through the Great Depression. The company actively advertised its soap during daily radio serials whose major listeners were housewives: Procter and Gamble’s target audience.
The odds aren’t really slim; they are just as you see them. Survival is still humankind’s most basic instinct.