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Recession-Proof Your Business

Written by: David Carter

Article Overview: In a recession you face one of two decisions. Do you stay the course "as is" or do you make a big change? Can you reinvent your business and focus squarely on ideas on how to drive revenue? Victor Cheng, author of The Recession-Proof Business, analyzed the last 12 recessions going back 136 years in US economic history. He was looking for examples of companies that had begun as small businesses during a recession, depression or economic panic and generated significant sales in a down economy. He discovered dozens of such cases, and Cheng developed four crucial guidelines to reinvent and recession-proof your business.

Recession-Proof Your Business

In a recession you face one of two decisions. Do you stay the course "as is" or do you make a big change? Can you reinvent your business and focus squarely on ideas on how to drive revenue?

Victor Cheng, author of The Recession-Proof Business, analyzed the last 12 recessions going back 136 years in US economic history. He was looking for examples of companies that had begun as small businesses during a recession, depression or economic panic and generated significant sales in a down economy. He discovered dozens of such cases, and Cheng developed four crucial guidelines to reinvent and recession-proof your business.

I have written about this topic before and believe it is more important then ever to focus on reinvention as we build and prepare for the new chapter coming in our economy. Use these principles to focus on how you can drive revenue.

1. Adopt the recession-proof mind-set

We are what we think! And how we think determines how we act. Cheng discusses four tips to adopt the recession-proof mindset.

First, there is still money out there-go and find it. In a severe recession the economy generally shrinks about 5%. The US economy was approximately $14 trillion before the current recession. This means that there is still $13.3 trillion in economic activity and spending left in the economy. Put this in perspective by writing it out! $13,300,000,000,000

Second, base your decisions on facts, not headlines. Avoid the media negativity and seek the true and accurate facts to base business decisions.

Third, exploit the opportunities that recessions create-it’s the old Chinese proverb that in adversity there is always opportunity.

And fourth, adapt or die. Quickly adapt to your new market conditions. Here speed is the key to reinvention and driving new revenue.

2. Solve a problem that gets worse in a recession

The key to guarantee that your customer demand will continue to exist for what you have to offer is to provide your customers with a solution that gets worse in a recession. Cheng’s example here is the beginning of Fortune Magazine during the Great Depression of the 1930’s. The only competitor was the Wall Street Journal which at the time had few articles and mostly statistics. Fortune was the only source that discussed the major business issues of the day in any depth. The need for information was the problem that got worse.

3. Make your business competition-proof

The ideal position to be in during a recession: strong demand with little or no competition. The key to this strategy is to go well beyond modest market differentiation. Look for a radically different direction. Coors Brewing Company is such an example in 1873, the beginning of the longest economic depression in US history. The problem that got worse in the depression was the need for alcohol! At the time, all brewers were on the East coast with no distribution system for the West. Coors set up their brewery in Colorado and targeted settlements across the Western US including mining communities. Coors was the only option for these consumers by implementing a radically different distribution system.

4. Market more aggressively, not less

Every business has issues of overhead and cash flow. Every minute not moving at full steam is extremely expensive. Most businesses can afford to slow down temporarily, but most cannot stop doing business without running out of cash. Once you have the first three rules of recession proofing and reinventing your business in place, it is time to speed up your execution. And the area that sets the tempo for your business is sales and marketing. It is time to be more aggressive in your sales and marketing, not less. Your competitors are expecting to lose revenue and market share in this economy – don’t disappoint them!

Gather your leadership team and brainstorm the four guidelines for recession-proofing and reinventing your business so that you can grow and thrive in this recessionary economy and the new economy coming. Remember: strategy is about choices – what you decide to do – or decide NOT to do – will carry consequences. Go reinvent!

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Article Tags: decisions, opportunity, recession proof, small businesses, strategy



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