The secret to success during an economic recession

The secret to success during an economic recession

What’s the number 1 streaming service for films and movies?

There are probably a few you thought of, but I can bet you that somewhere on that list, you thought of Netflix. Netflix is one of the world’s leading entertainment services with 223 million paid memberships in over 190 countries.

But to me, what stands out about Netflix is that it grew out of a recession. In 2008, during the great recession, they introduced a new product (the streaming service), as a response to dying video rental stores. Then, they continued to work on partnerships with organizations like Xbox so people could stream through those devices.

These innovations allowed the company to continue to grow during the economic downturn, and even increase memberships and subscriptions while other companies were struggling to maintain revenue.

Netflix is just an example. From Mailchimp, Lego, Team Logic IT, and Airbnb, some of the richest and most successful businesses and business people made their fortunes in recessions. 

The 2008 financial crisis led to the closure of 800,000 businesses. And there’s absolutely no denying that we’re heading for a global recession or depression.

Let’s talk about the UK recession

If you’ve watched news over the past couple of weeks, you’ve probably been thrown off by news about an economic recession. Household incomes are being squeezed by high inflation, interest rates are rising and business and consumer confidence is weakening.

And what we know about a recession and inflation, is that there will be a lot less money around for people to pay their electric, their gas, their TV, and other bills. So they’re gonna stop buying as much, and bigger businesses are going to stop selling as much. 

And as a result, they will reduce headcount. People will lose their jobs, simply because it’s the easiest thing to do for business owners when times are tough. Human resource is the simplest and quickest way to reduce your overheads.

Just a few days ago, Twitter sacked 50% of its employees, then went ahead to lay off another 4,400 contractual workers. Facebook also announced that more than 11,000 employees would be fired to reduce costs following disappointing earnings and a drop in revenue. Amazon is set to lay off 10,000 workers. These are some of the biggest companies in the world!

All these announcements were made in the last two weeks. And it’s not going to get better…

So this puts a flush of really good people into the market. And since some of those people really need to pay their mortgage, they will work for less money somewhere else to be able to get money coming in.

Things are about to change, because in the last few years there has been a lot of money around, and little labour. People got to choose where they work and how much they earn. Now, there will be an influx in supply and less money in circulation.

What this means for small business owners

A recession isn’t easy for anyone, but it’s even harder for small business owners. Businesses that were easily thriving will now have to work twice as hard to succeed.

And if you don’t become proactive about it, you’ll fail. Your customers will have less to spend and your income will drop. And if you’re not making enough to sustain your business, you have to let it go.

And truth be told, the reason why most people make fortunes in recessions as lots of businesses end up folding is because they’ve not been proactive. They’ve not mastered their sales and marketing.

Once all the competition dies down, the strong businesses mop up all of the demand and whilst that demand might be less, when there’s no option, there’s not as much competition. You’re gonna find that there are more opportunities.

Success over the next 3 – 6 months is going to be about how well small business owners are able to adapt to tougher selling conditions. And for me, the most significant part of the puzzle is proactivity. It’s being proactive, to not sit there as the orders dry up. 

Here are 7 ways to remain proactive:

1. Stay positive

There’s a lot of doom and gloom going around about the recession, but if you’re going to succeed through it, you have to keep a positive attitude.

How? Don’t contribute to the doom and gloom because then it becomes self-perpetuating. In life, there’s always positive and negative, left and right, rich and poor…

From where something’s not going your way. It can be very easy to look at all of the things that are going wrong and concentrate your energies there. But that won’t ever help you change your mindset. So wherever there is negativity, there is always an opportunity to look for positive.

2. Control the controllables

You’ve got to focus on the things that you can actually do something about and what you can do. Embrace proactivity in going out and speaking to people and making things happen. Proactively network proactively. Proactively cold call. Pro actively seek referrals. Whatever works for you.

Don’t worry about the things that you can’t do. You can’t control what a government does. You can’t control what’s happening with other businesses. You can’t control any of that but what you can control is your attitude towards it all.

3. Spend more to make more

There’s a great quote by business tycoon Warren Buffet that goes, “Be greedy when others are fearful, and fearful when others are greedy.”

When others are greedy, prices typically boil over, and one should be cautious because they may overpay for an asset that subsequently leads to few returns. When others are fearful, it may present a good value investment opportunity.

At Outside ideas, we’re definitely spending more. Yes, we’re speculating, but we’re also about to start advertising on Facebook. We’re using software to get more word out there about us on LinkedIn. And we’re contemplating taking on an additional member of staff to do sales.

4. Create a plan

Spend time in strategy, really understanding who the customers are and what their pain points are going to be. Invest in design. What being proactive means is having more conversations with people or having more eyeballs on what you do. 

So that could mean going out leafleting or literally knocking on doors, or speaking to people, or contacting them on LinkedIn, and asking them whether they’d be interested.  And lastly, find more strategic partners, and proactively ask for referrals. The proactivity will soon pay off.

5. Calculate your risk in proactivity

You can’t just blindly spend more money without properly calculating. You’ve got to do a cash flow forecast. That’s what proactivity is all about.

Be honest with yourself about what your income looks like now. What it would look like if you lost 50% of your customers? What would it look like if you were able to keep your customers and get new ones? 

This can inform how much money you’re willing to spend more in sales and marketing, and still survive if things don’t exactly work out.

6. Find the right tribe

Surround yourself with positive-minded people. 

Find people who are going through the same thing but that are going to be positive and proactive and surround yourself with them.

If you are hanging around with people that are just talking about doom and gloom and how the recession is ruining everything, you’ll land in trouble. Find people who encourage you to learn, network, collaborate, and make it happen.

7. Cultivate a habit of proactivity

I am a raving fan of the book Atomic Habits by James Clear. He taught me about how you create a habit and one of the most important factors in creating a habit is to gamify it to make it fun so you can compete with yourself. 

And with my clients on a weekly basis, they compete against themselves to learn a prerequisite number of productivity points. 

So you can track how proactive you are, by gaining points on stuff like going to a networking event, picking up the phone, knocking on someone’s door. And competing with yourself makes you even more proactive.

Conclusion

I want to write a book on proactivity one day because to me it’s such a simple concept, and I can guarantee that if people play with proactivity points and give themselves a score every time they do something, that’s going to move the business forward.

You’ll want to start competing with yourself. In the meantime, I’ve found that staying proactive is the secret to success in times of an economic crisis.

The five ways to stay proactive are:

  1. Stay positive
  2. Control the controllables
  3. Spend more to make more
  4. Create a plan
  5. Calculate your risk
  6. Find the right tribe
  7. Cultivate a habit of proactivity

If you would like help in becoming more proactive, get in touch. Outside ideas are on a mission to help people and businesses grow. We have a range of support that can help you.

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