A great business idea is in your head and you’ve made the preliminary steps to get it up and running. But your eyes are glued to the news discussing an oncoming recession and you feel cheated or devastated. After all, it’s not wise to start a business during a recession… right?
The truth, as with many things, is a lot more complicated. It may be a smarter decision to start your business during a recession rather than wait for it to end. Don’t believe us?
Let’s dive into some logical analyses of the problem, as well as some top podcasts that back up our point of view.
Why Is It Smart to Start a Business During a Recession?
First and foremost, is it even smart to start a business during a recession? It can be for several reasons.
A recession is not the same thing as a full depression. While both are characterized by declines in economic activity, but recessions are much less drastic. They have a shorter turnaround time than depressions.
Recessions are caused by general drops and spending, but the market usually recovers on the order of several weeks or months as opposed to several years. This is why the 2008 recession was declared over by 2009.
The big thing to remember here is that recessions end. They do not last forever and the market will eventually turn up, allowing businesses of all types to flourish once again.
This means that you shouldn’t necessarily put your entrepreneurial endeavors on hold just because the market takes a dip.
People Don’t Fully Stop Buying
People may slow their buying power during recessions… But they don’t fully halt it.
There are examples of several companies, like Chevrolet, that performed widespread advertising campaigns in the depths of the depression and ended up becoming leaders in their industry.
As such, starting a new business and marketing your product or service capably can lead you to acquire a significant market share in your niche or industry. This is also true because many businesses that would otherwise act as your direct competitors may be reeling from the effects of the recession as you ramp up content production.
Recession Means Opportunities
Although some people may eventually fail and some businesses may capsize, this doesn’t mean that yours naturally will. Instead, you can look at recessions as opportunities for a new market player to enter the game.
In this light, a recession isn’t the end… it’s the beginning.
How to Grow a Business During a Recession
If you want to start up a business and make sure that it grows throughout the months when the rest of the market continues to dip, you need to focus on four main steps.
Make a Business Plan
Firstly, make sure you have a business plan from top to bottom. This includes a worst-case cash flow scenario for the next 12 months or more; such a plan helps to insulate your business against the recession’s effects and will prevent you from going bankrupt.
Treat Your Customers with Care
Secondly, treat every client or customer you manage to gather during these crucial months with care. This may mean facilitating deeper relationships with your clients or customers, focusing on their needs above any new customers, and listening to their complaints seriously.
Remember, people don’t stop spending, but they do spend much more selectively during a recession. As such, they’re much more willing to let a company or business drop out of their spending habits if they don’t feel that their time is taken seriously.
Develop Strategies
You’ll next want to develop specific strategies that can be you to more customers. If you have a big budget, you can easily redouble your marketing campaign and possibly see big conversion growth as a result.
Companies that do spend lots of time marketing during a recession are often able to take advantage of the relative lull in competing for advertising as a result of their competitors saving money and laying low. Either way, you should have content or product plans that keep you busy and diverse over the coming months.
Hire New Employees
Finally, recessions are ironically one of the best times to hire new employees depending on your staffing needs. Many companies shortsightedly and reflexively fire some of their best workers as a recession looms or hits.
This means that recessions are the best timeframe for a hirer. You have a glut of talent at your disposal that will possibly be willing to work for slightly less than the wage they would demand during optimal market conditions.
As you can see, there are many factors at play that could make a recession market one of the best markets for business birth and growth you play your cards right.
Can You Insulate Your Business From the Effects of a Recession?
Ultimately, surviving a recession depends on you having an effective plan to handle any financial downturns your business may take. This includes having an escape or exit plan, particularly if your business deals heavily with investment opportunities.
It’ll also normally be worthwhile to obtain a significant line of credit that you can use to help your business float through weeks or months that are particularly bad for business. Just because you can survive a recession doesn’t mean you’ll necessarily profit or be able to pay all your bills; having a line of credit you can rely on to make it through these difficult times means that you can survive to fight another day.
However, keep in mind that it’s more difficult to secure credit during a recession than it is before one. As such, we’d recommend attaining this credit line early and keeping in your back pocket for the proverbial rainy day.
Lastly, be prepared and do your research on the economic activity for the country and world at large in addition to economic trends for your industry.
This is important not only for everyday business strategy but also for determining when the recession is likely going to end. This allows you to formulate your short-term strategy as well; if you believe that the recession is soon to dry up, you can start diverting resources to increase your production and reach new heights.
Alternatively, you should be researching in order to determine when the ideal time to start your business during the recession may be. It all depends on your industry or niche.
Top Podcasts for Starting/Maintaining a Business During a Recession
Podcast Pontifications: Podcasting Your Way Through the Coming Recession
Podcast Pontifications is a straightforward and useful podcast to regularly listen to if you use podcasting of the content or marketing tool for your business.
It’s hosted by Evo Terra, a podcaster by trade who’s dedicated to showing you advanced tips and tricks for podcasting success. As such, it’s a little more technical and in-depth and covers complex topics more than other “how-to” podcasting shows. However, we believe it’s invaluable if you plan to podcast during the next recession.
The episode listed here dives deep into several ways in which you can prepare for a recession as a podcaster, including:
- diversifying the content that you podcast
- differentiating your podcast content
- understanding your podcasting stack
- building your network early so you have listeners to fall back on when things become slow
Coach Mike: Recession Proofing Your Business
Founder’s Insight Podcast is a collection of different podcast series beneath the general Founder Institute Umbrella.
Each podcast is unique but has a host based on the type of content provided and the topic focused on for the week. The Coach Mike series is tutorial-based, but each of these podcast series provides invaluable tools for startup enthusiasts or entrepreneurs looking to begin and succeed with their businesses.
The above podcast has host Mike Suprovici talk with the special guest serial entrepreneur Bryan Janeczko and Founder Insights editor Dustin Betz. Both the guests and the host talk about strategies you can use to make sure that your business succeeds during a recession.
They cover specific steps you can take during the Coronavirus’ effects, including:
- the best practices for planning your business in 2020 and beyond
- determining the best services or products that can succeed during a recession compared to products that don’t
- successful lessons drawn from the founder experiences of the 2008 recession
- examinations of why certain companies and ethical ventures do better during hard financial times compared to others
Evolved Finance Episode 90: Preparing Your Online Business for a Recession
The Evolved Finance podcast is hosted by Parker Stevenson, and each episode normally dives into entrepreneurial concepts and advice.
The episodes are usually current in topic and contain specific strategies you can implement with your business, so their archive is a gold mine if you run a modern entrepreneurial endeavor.
The above episode is specifically based on preparing an online business for the natural dips that a recession brings to the market. The episode discusses in detail:
- how important it is to increase your business’ savings
- what businesses are most impacted by economic downturns
- why emergency funds are important
- why there is still a market for growth as a business owner during a recession
- what you can learn from uncertain economic times as an entrepreneur
The McKinsey Podcast: Preparing For and Managing Through an Economic Downturn
This podcast could be useful if you’ve recently started a business and are forced to go through your growing pains during the upcoming recession.
The McKinsey Podcast is a well-known business and management podcast that usually has episodes incorporating conversations with leading business experts. Topics are broad but vary from week to week, and normally incorporate a management or leadership element; this makes them an ideal choice for startup leaders to listen to. Other episodes may be region or industry-specific.
The episode above provides key insights and advice as you prepare for and managing market downturn. The tips shared within could be particularly helpful if you have a baby business that’s just starting to grow, only to run into the potential disaster that a recession represents.
The podcast episode goes over:
- the signs that will let you know a recession is coming soon
- how recessions differ from one another
- what business leaders can do to prepare for recessions
- how you can focus on hiring or “reskilling” your workers to improve productivity
Building a Story Brand with Donald Miller Episode 145: How to “Recession Proof” Your Business
This podcast is double hosted by Donald Miller and JJ Peterson, both entrepreneurs and business experts who interview guests almost every week and you give out marketing wisdom and advice all too often. While most of their episodes focus on broad concepts that are applicable to most businesses, this doesn’t limit the value or other advice they can offer to your endeavors.
The episode above explicitly deals with making sure your business can survive and even thrive during a recession. It’s relevant both for existing businesses and for new businesses, as the podcast goes into several ways you can produce growth and expand your business even while the competition begins to backtrack.
Specific topics covered include:
- how you can protect your business from an economic downturn
- strategies you can utilize to make the most of every dollar
- how you can expand into your market as competitors give up space
- ways in which you can predict a recession before it fully hits
Conclusion
Ultimately, folks who tell you that there’s only a single time and place to start a business are lying. Anyone with the right motivation and strategy can start a business that succeeds over the long-term regardless of the overall economic conditions.
Many historical businesses did just fine during the Great Depression and the 2008 recession, so there’s no reason you shouldn’t start a business during this next recession as long as you have your ducks in a row.
Using the above podcasts and other online resources will give you the tools you need to succeed in this market while your industry competitors scramble. The time for growth is now!
