Published: November 05, 2008 Last Updated: September 02, 2021
That Dreaded R WordToday I wanted to write a follow up to my last post on my frustration with the media and the "Financial Crisis". Specifically, I wanted to write about what I believe you should do if you are a Business Owner.
Firstly, as I stated in my last post, there are always people who make money during a recession. It is also true that there are always people who will lose money and become bankrupt during a recession. If you are like me, you should be excited by this news. Why I hear you ask?
Downturns in the economy are a good way to separate those businesses that are well run with solid foundations from those businesses that aren't. When the economy is booming, there is always a flurry of new businesses that make money in spite of themselves. These are the sorts of businesses that can (not always) give your industry a bad reputation and make it harder for you to make a sensible profit, by continually undercutting and providing poor service. As the economy slows, they are generally poorer placed to handle the lower revenues and go "belly up".
So even though the industry spend may drop, there are fewer businesses sharing in it. So in fact you can still turn over the same if not more. Furthermore, some of the businesses that do survive, start cutting all of their expenses (including Marketing) and go into their shell to try and weather the storm.
So what we need to do is make sure that we are the businesses that not only survive the slowing economy, but prosper in it. My suggestions would be:
- Focus on your fundamentals to ensure that they are solid (ie: cashflow forecasting and reporting)
- Review all your expenses and look for opportunities to lower them (as long as it doesn't impact on your products or services)
- Continue spending money on marketing (or even increase it). It's easier to be noticed when your competitors are all cutting back on advertising
- Keep an open mind and look for new opportunities
- Whatever you do, do not blame the economy. It is an easy cop out and may make you miss what the real underlying problem is
- And lastly, choose not to partake in the "Recession", but focus on achieving your goals.