New Opportunities and Changing Needs: Lessons You Need to Learn as an Entrepreneur in the Time of Recession
Disruptions come up from time to time and as humans that we are, we never take the time to plan for them; at least not for a gigantic ones like the one the world is facing right now.
The world has not seen a pandemic disruption in over 100 years and it was since 2008 that the world experienced a financial freeze similar to what is going on right now.
I wasn’t prepared for what is here and I also believe that you were not. But for every problem, solutions are bound to eventually emerge. So in this article, I will be sharing with you some “half-full cup options” that every entrepreneur can explore in recession to come out a winner.
Recession shuffles value in all markets
Every market experiences a reshuffle during a recession and this in itself is a good thing. Research has proven that many of the great companies that we have today such as Google, Facebook, Amazon and even some of the Big banks were either born or grew through a recession.
A McKinsey data shows that companies that acted swiftly to counteract the effect of a downturn, ascend to the top of their markets
The greatest lesson for all entrepreneurs is to know that a recession often shakes up the competitive landscape, opening up markets that allow small but agile companies to make gains and take strong positions where it was previously almost impossible.
Recession changes needs and taste
The norm is that what most people were buying before recession won’t be what they will be buying after.
The taste and preferences of buyers will change significantly and this is why every smart business owner should begin to anticipate and position for that change while it comes.
The elasticity of demand will also change as some things that people didn’t see as expensive will suddenly become so to them and vice versa. It is more like a game of understanding times… Those who understand the times and its needs will be profitably rewarded.
Look for opportunities and seize them
A lot of your competitions will be open to negotiating mergers and even outright buyouts. Some big companies may want to cut their expensive suppliers for smaller ones, bigger office spaces and furniture will be going for dirt cheap prices.
Gadgets, tools and many subscription services that help you work better will be free or at a discount…these and more are all the opportunities that come with a downturn.
Open your eyes to some of these opportunities and sharpen your negotiation skills so that you can get yourself a comfortable seat at the tables where these things will be discussed.
Adjust your expectations
There is always a cash drought after any recession. Many funders will back out or delay because they too will be battling to stay above the water.
So you need to be ready for this and look for alternative funding opportunities for yourself and your business.
The great news is that we have “Crisis investors” who particularly hunt for opportunities during and after crisis. they identify these opportunities and make them a good offer (one that will bring in the money without you losing your business).
New leaders will be created
A McKinsey report shows that during crisis, nearly half of current market leaders will slip to the back of the pack thereby giving the opportunity for new industry leaders to emerge.
The question now is if you are positioning as one of those new voices that will echo from the desert.
Risk managers win after a crisis, this won’t be different
In times of ease, the conservative ones might still have some crumbs to feed on while the recklessness of the overly aggressive ones will be forgiven. But during and after a recession, only those who become better at avoiding or taking risks alone but in managing them will be the ones to get ahead.
Many things that used to be sure good bets suddenly turn risky in recession due to fear, uncertainty and slump in demand.
To best prepare, now is the best time to hone your risk management skills and come ready with it.
You can’t delegate your future during a crisis
A business that you still have interest in remains one of those things you can’t just plug and play. Times of trouble will always humbly remind us that important things need attention.
So if you have “over delegated” before now, get back to basics and get a responsible hold on the things that matter in your trade…
You need to be in charge now more than ever before.
Cash flow is your greatest asset in recession
Cash is king and cash flow is Queen; and they both make for a prosperous kingdom.
Find new ways to make money, new ways to cut costs and spend only on things whose values are immediate.
Since a lot of things are usually in waiting during recession, things that won’t help you improve your financial position might equally wait.
You need all the cash you can conserve to keep important things running, don’t mess with this or your business will become a mess.
Nobody can accurately predict the future in recession
Leave that office for God.
Let your focus be on the things that you can control and improve now and not necessarily on how the future is going to turn out.
In the words of Maynard Keynes, “in the long run, we are all dead”.
Yes, Economics will try and Data will give pointers, but forget all of those and focus single-mindedly on those things that you can control here and now.
Recession might not come and even if it does, it might not be a global spread or last long enough to lead us into a more serious problem like depression.
However, it is a wise thing to be prepared for the worst while expecting the best and that’s exactly what I hope this article achieves.
To your #moneysense.
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