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How to Thrive During a Recession
The worst effects of the 2008 global recession may now be a distant memory for some, but the impact on the world's economy is still there for all to see. Indeed, despite being eight years removed from a banking crisis that brought the world to its knees, many businesses are still battling against a struggling economy.
Across Europe, talk of the UK's potential exit from the European Union is causing the value of the pound to drop, with the country looking to be slipping closer to another mini-recession. While the full impact of the EU referendum won't be known until after June 23, there are signs that some companies are already beginning to struggle.
The Recession Continues to Bite
New car sales in the North East of the UK fell by 10% in May 2016 – according to economic experts, this is just one example of a business sector that's coming under increasing pressure. In fact, it's not just the UK and Europe that are feeling the pinch. Major American corporations like KFC and McDonald's are currently closing hundreds of stores in a bid to cut costs.
KFC recently pulled out of Botswana after 20 years of service in the country, while McDonald's shut down 350 stores in 2015, with further closures planned for 2016. The reason, as if it wasn't obvious, is the continued slump the global economy finds itself in.
Naturally, when the financial markets are struggling and people have less money to spend, businesses start to struggle. However, as Shawn Freeman recently pointed out in his article for the Huffington Post, an economic downturn can actually boost your business. Providing you know how to handle yourself in times of austerity, you can actually improve your company's bottom line.
Where There's a Will….
Citing a number of businesses that were formed during the recession of the seventies, such as Microsoft and FedEx, Freeman postulates that downturns can actually have a number of benefits for aspiring business owners. One of the biggest positives is that there are plenty of talented people out there looking for jobs.
Having a large pool of talent to choose from can be hugely beneficial for any new business and something that may not be as easily accessible during times of economic prosperity. Freeman also points out that downturns can be a great time to develop strong long-term relationships with vendors, as they are likely to value your custom more highly.
Selling Yourself During a Downswing
Naturally, to nurture such partnerships, you first need to establish a stellar relationship with potential investors and vendors. One of the best ways to do this is by presenting your company with a clear, concise and appealing pitch. Of course, marketing yourself and your business is something of an art form, which is why the Hiscox knowledge centre urges small businesses to focus on four key areas when they're putting together a pitch.
Collating the opinions of marketing experts, Hiscox outlines how business owners should first consider the four Ps of pitching - People, Price, Principle and Proposition. The site then focuses on the audience’s thought process, idea protection and, finally, the art of selling creative vision. By breaking the process down in a systematic way, you should be able to improve dramatically your marketing abilities and therefore build those vital relationships you can use to your advantage in tougher times.
After putting together a solid pitch and nurturing your business relationships during times of hardship (by negotiating on price and discounts etc.), Freeman asserts that you will enjoy more fruitful business dealings when the economy is on the up.
The Opportunities are There
As McDonald's recent closures have shown, running a business during an economic downswing is tough. However, it's important not to let the situation beat you. As Freeman has pointed out, an abundance of talent, the ability to broker new business relationships and a genuine desire for something new can all help a business thrive during a recession.
While you might not become the next Microsoft or FedEx, there's every chance you could turn a healthy profit during times of economic instability if you're able to think outside of the box.
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