With the world entering a period of uncertainty, there is a lot of focus on the economic effects of the global pandemic. Experts are advising us to prepare for a recession, and this is adding more anxiety in a time of crisis. However, is the future really all doom and gloom? Can a recession actually inspire people to think outside of the box and create a robust business model or even, become a millionaire?
Some businesses and individuals come out of recessions stronger than they went in. They learn to adapt to the demands and needs of society. If we take the COVID-19 crisis, we can find some excellent examples of this. Restaurants have been asked to close all over the world. With no reliable timeline on this, they had to adapt fast. With innovative thinking, many of them have reworked their business model and become take away or delivery establishments only, turned their focus to education by delivering online cooking lessons for those who are housebound, and they’ve reinvented themselves as grocery stores. Realising they have access to the produce that the public needs such as fresh food some restaurants are now also offering recipes and recipe boxes, supplied with all the ingredients you need to recreate their dishes at home. This utilises their buying power and keeps a strong relationship with its suppliers while providing an additional income. Innovation like this is what will not only help these businesses survive but also prosper in challenging climates.
In some cases, this has cushioned the blow and found the restaurant more time to stabilise. It also puts them ahead of the competition, particularly when the lockdown begins to lift and they have increased the services they offer. Diversifying is the key to any crisis situation.
PRL Recruitment, Ireland’s go-to Sales Recruitment Agency has weathered several economic challenges and recessions over our 45 years of trading and servicing the Irish market. Through understanding the obstacles and working out ways to traverse them, we have managed to stabilise our turnover and even strengthen the company through crisis times.
Throughout history, many of the world’s most recognisable brands and businesses were started in a recession. Understanding what people need during troubled times can lead to something magical…
Disney – the brainchild of Walt and Roy Disney, was incorporated in 1929. This was at the start of the Great Depression – a 4-year financial crisis that rocked America. The brothers understood what Americans needed. To smile. Over the depression, the brothers worked hard to create their first-ever feature-length movie, Snow White, which aired just after the Great Depression ended. From this understanding of their target market and believing in the emotional connection a consumer needs to have with a company, one of the largest production companies was born.
Another business that roots were laid in not one, but two recessions is Apple. The iPod was created and developed by Steve Jobs and his incredible team just after the dot com bubble, burst. Understanding what the public wanted and creating a simple and affordable option was the key to his success and the start of one of the largest technology companies in the world.
While looking at the current financial forecasts sends many people into a panic. You need to remain a level head and get creative with your thinking. You may think that spending money or taking a leap of faith is counterintuitive in a financial crisis, but the opposite could be true.
During recessions, banks often reduce their borrowing rates. There is a simple ‘supply and demand’ rule to banking. If we aren’t borrowing money, they aren’t able to make money. By reducing their rates, they attract more business. This could be a great time to secure the funding you’ve always needed to start your own business. Although, we advise you seek professional guidance before securing any form of business funding to help you manage the risk and improve the return.
It’s a bitter pill to swallow, but we are going to see a lot of property come onto the market over the next 12 -18 months. With financial hardship facing the country, people will default on the mortgage or be forced to downsize. Homes already on the market will become stagnant, and with owners needing to liquidise cash, prices will reduce. This is a great time to buy if you can. When the property market stabilises, and demand for homes is on the rise, you will make money and have an attractive property portfolio. Buying property this way has produced a lot of millionaires who have used the buy low, sell high method.
Investing during a recession is a high risk, high reward. Many people become nervous about their investment portfolios dropping dramatically, at a point they start to panic and sell at rock bottom prices. Warren Buffett, an American business tycoon, said: “Be fearful when others are greedy, and greedy when others are fearful.” He is renowned for buying up shares when people are bailing out, making vast amounts of money when the economy settles, and share values go up. Of course, when you already have billions of pounds in the bank, you can afford to lose a little if your gamble to invest doesn’t work…. for you or I, this might be very different.
Some investors are using profit they make to reinvest. Using the knowledge they have learnt over years of trading in the stock market to wait until prices have dropped enough. By only using the profits from their investment portfolio, they are managing the risk.
Getting involved in the stock market requires a strong knowledge of economics. So, it’s best to speak to an independent advisor before you lay down any investments. But, if you get it right, when the upturn happens, and confidence returns to the marketplace, you will come out of recession with a robust investment portfolio.
You cannot escape the fact that recessions are bad for business. If you keep doing the same thing, you could find yourself in severe financial trouble. Whether it is personal or commercial wealth, the first thing you need to do is prepare for change – be innovative and think outside of the box. Reworking your strategy, seeking advice and understanding the current market trends is the key to survival. Using your creativity to understand what people need and delivering it a simple, well-presented way, is the first step to making some serious money. Stay calm and use your knowledge and experience to be successful in these challenging times and who knows, you might be the next Walt or Roy Disney…