Business Strategies for the Recession

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Recessions are a natural part of the business cycle, meaning that we will see them over and over again so, as small business owners, we should always have a strategy to deal with them when they arrive. There are ways to minimize the effects of a recession on your small business.

Remember that the goal of the Federal Reserve is to stimulate the economy. If they stimulate it too much, as they seem to have done currently, we end up with inflation in combination with the economic downturn. This is called stagflation. This situation is harder to deal with for small business owners but it is, fortunately, less common. Unfortunately, an economy almost certain to enter a significant period of stagflation is what we are faced with in today’s recession.

OPEC analysts are predicting that crude oil prices will remain high due to political instability in the Middle East, Venezuela and Columbia and Nigeria. This means that high oil prices will fuel more stagflation. When added to the continuing collapse of the US mortgage market and stock market declines not seen since the Great Depression this means more tough times ahead.

It is my opinion that 2008 will be known as a year of great economic turmoil. Many small businesses will be lost. However, if you handle it correctly, it can also become a year of greatest opportunity for your small business. Let’s look at what it may mean for you if you implement business growth strategies that work during a recessionary, and even stagflationary, period. Even if it doesn’t work, it beats of sitting around hoping things will get better eventually.

First of all, we need to realize that the next two years will be a time of great economic and political change. There will be an entirely new political team in charge of Washington no matter which party wins the US Presidential election. The credit crunch is sure to linger for years, particularly in some markets. Energy prices are almost certain to remain quite high. It is a perfect storm for our economy.

To survive and thrive, companies must be built around high performance organizations which are able to react expediently to market changes. Companies that survive will have to capitalize upon new market opportunities and avoid competing for business in low margin and commodity areas.

You must always be on the lookout for ways to change your business model to match with changes in both your local marketplace as well as the global and Internet economies. You will need to quickly adjust your current marketing processes as market conditions dictate. It is absolutely important that you take the time to improve your overall profitability without any regard to what is happening in the rest of the economy.

You must take the time to make a complete and through assessment of your company’s potential. You will need to determine where improvements can be made. You will need to discover where you can make cuts to your expenses, particularly when it comes to employees. And, lastly, you must choose practical, low or no cost, strategies that will strengthen your business model.

This entry was posted on Monday, December 4th, 2017 at 8:51 pm and is filed under Recession. You can follow any responses to this entry through the RSS 2.0 feed.

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