Dec. 28, 2019
Many economists are now talking about the U.S. economy entering a recession in 2020, following a longer than usual recovery of 10 years. Recessions are a normal part of the business cycle in a capitalist country. Some are mild and some, like the Great Recession of 2008-2009, are severe, caused by unusual circumstances such as the housing bubble.
In a recession, defined as two consecutive quarters of negative growth in the GNP (gross national product), consumer confidence dips, the stock market may decline, and sales of goods and services decline, resulting in layoffs and rising unemployment, and corporate bankruptcies. Real estate prices may drop too, as much as 30-40% in some areas of the nation.
However, it need not be all doom and gloom. As Warren Buffet says: "Be fearful when others are greedy and be greedy when others are fearful." Opportunities abound.
Stock Market -- As the price of nearly all stocks decline, you have the opportunity to buy stock in quality companies at "fire sale" prices. If you are willing to hold them for a year or two, you can be richly rewarded when the market bounces back.
Real estate - If you've been sitting on the sidelines, waiting to buy that first house but postponing the decision because you couldn't afford the price, this may be the time when that house suddenly is in your budget range. If you are an investor that does flips, you can get that house, rent it out for a few years, then flip it when prices recover.
Business -- In a recession, many of your competitor with no cash cushion will disappear, either through mismanagement or because they are not well diversified or didn't save for a rainy day. They may have depended on one product line that did well when times were flush but which doesn't do well when consumers' budgets are squeezed. That's your chance to pick up market share, or get more sales with you marketing.
The goal in a recession is to survive. If you can still grow, all the better. This may be a good time to re-evaluate the business and develop new product lines that will diversify your customer base. Get a good grip on expense control. Good time for market research. Good time to differentiate your business from the competition by offering unique services or product features that no one else has.
When cutting costs, consider travel costs, extra employees not critical to your main business, office space you don't need, trade shows, unnecessary advertising. You still need to spend on marketing, but make sure it's cost-effective, and maybe do more guerrilla marketing and low-cost social media advertising. Scrutinize that Google Ad Words or Facebook budget carefully. Are you using an expensive PR firm or ad agency? Do you still need them, or can you cut back their services? Can you use local college students as interns for some of your work?
Note: If you want to get some solid advice about weathering a recession, strategy, planning, and business coaching, consider contacting John LaRosa (MBA in Marketing, 40 years business experience) for business coaching. See marketdataenterprises.com/speaker for details. First phone consult is free.