BUSINESS NEWS
Worried about a recession? Here’s how to get your business through it
Steve Strauss
Special to USA TODAY
Published 8:00 AM EDT Sep 18, 2019
The recession talk has gotten loud.
Chen Liu, on the Motley Fool, said recently: “If I were you, I would be very cautious about the stock market this year.” Why? “I am a firm believer in the October Effect. The October Effect is [the historical fact] that stocks tend to decline during the month of October.”
Similarly, Michael Wilson, the chief strategist for Morgan Stanley, is worried too. He pinned the blame on Trump’s trade and tariff war: “In the case of (tariffs] on China’s exports to the US, we are inclined to think this has the potential to tip the US economy into recession.”
And finally, in a poll of 235 top fund and asset managers, Bank of America Merrill Lynch found that “recession fears among fund managers have risen to highest level in a decade.”
So yes, there are some very strong indicators that we are headed into a recession, possibly a severe one, and probably sooner rather than later. Unfortunately, given that we are already in a heated election cycle, the chance that something will be done in Washington to help mitigate the situation is unlikely.
Which means, once again my entrepreneurial friends, that if something needs to get done, it is up to you. If a recession is coming, and it is, then the time is now to begin to prepare.
Here’s how:
1. Start to do the opposite.
Warren Buffet famously advises, “buy when everyone else is selling and sell when everyone else is buying.”
That should be the case here too.
Example: I know of a small business that sells boxes. In good times, like now, the owner sells a lot of expensive, quality boxes printed with customers’ logos. They love and are willing to pay for that branding.
But not so in a recession. In recessions, my pal sources used and damaged boxes and offers those for sale, knowing his customers will want a cheaper alternative.
And I just checked. He is sourcing new boxes right now. “In six months, supply will be harder to find,” he says.
As a SCORE counselor once told me, “Ask them what they want then give them what they want.”
Your customers are going to want to spend less. What will you have for sale that can meet that need?
2. Cut your overhead, now.
If you can find cheaper digs that works for your business, it might behoove you to do so now, before supply for cheaper spaces dries up. Review vendor contracts. Audit your expenses.
3. Look to create some new partnerships.
Teaming up with a compatible business can be so smart:
— You cut expenses, while doubling your reach
— New people are exposed to your business, for very little cost
— You also can gain new areas of expertise
By finding a new joint venture partner for a compatible project now, and testing out some ideas while times are good, you will create a bulwark against the recession when it comes.
4. Double down on marketing.
During a recession, most small businesses retrench. Mistake, that.
Do the opposite. Follow Buffet’s advice. Buy when people are selling. By increasing your marketing now, you simultaneously:
— Expose your business to new customers, some of whom will stick around during the recession, and
— Learn what works. your marketing now and stick with it.
Market your business. Then market it some more. And then market it some more.
5. Start a recession-proof business.
What if I told you that there is one sector of the economy that is practically recession-proof, that in fact has actually shown double-digit growth every year for more than a decade?
It’s called e-commerce.
Everyone is shopping online today, and not just at Amazon. There is no reason they shouldn’t be at your e-store. So go ahead, jump on the e-commerce train. It can chug-chug you down past the recession.
All aboard!
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Steve Strauss is an attorney, popular speaker and the bestselling author of 17 books, including “The Small Business Bible.” You can learn more about Steve at MrAllBiz.com, get even more tips at his site TheSelfEmployed, and connect with him on Twitter at @SteveStrauss and on Facebook at TheSelfEmployed.
