A lot of our clients bring up the risk of recession in every discussion, and understandably so. Every financial commentator has been shouting risk from the rooftop for months, and with inflation at such extreme level, everyone is starting to worry. Even top executives are worried about the economy, with Elon Musk cutting Tesla staff due to a “Super bad feeling” about the economy. If he is worried, why
would you not be. But how do you navigate this difficult time? What does it mean for your business? How do you navigate the uncertainty in this, or any economy?
The first thing that should go through your mind is the same thing that you should always ask yourself, how will a recession impact our business. Not all businesses are negatively impacted by recessions, some businesses are counter cyclical, some are recession proof, some businesses were even started during a recession. There is always opportunity if you know how to see through the challenge.
Some basic questions you should ask yourself are- how will my product or service perform during a downturn. Will people buy more or less of it? Will I have to change my price to compete? How am I situated in my industry compared to my competitors? These are questions you should already know the answer to, or that you can answer with a basic SWOT analysis. There are always risks in any business,
and a downturn will just exasperate your weaknesses. “Only when the tide goes out can you see who’s been swimming naked.”
Your business is still in the same industry, with the same competitors, it is just the environment which has changed. But the environment is always changing. Industry is always evolving, technology hits every industry at a different pace but eventually effects every business. Consumer behavior is always changing, trends are always changing.
This is where planning becomes essential. You need to understand what you can control, what is out of your control, and how you can use your strengths to weather the storm. What is your core product, what are your strengths and no matter what the environment, if you focus on your strengths and what you do well, you will be successful.
The biggest thing to remember is that recessions are a normal part of the economic cycle, they happen and they cannot be avoided. Often, trying to avoid them only makes them worse or prolongs them. But with the right planning and understanding of your business, you will be set to prosper after the storm has passed. Not every business survives every downturn, but those that due will reap the rewards of
better times.