The Recession and Your Business
If you spend too much time reading the news, it would be easy to get depressed. I don’t have cable, but I do read the top online news stories. It seems like every single one of them is about how bad the economy is, why we must have a bailout, and how unemployment is increasing.
Gas is expensive. Mortgages are collapsing. Inflation is sure to rise.
It seems everything is doom and gloom.
Yes, people are hurting. The economy goes through cycles and too many have expected growth to last forever without any hiccups along the way.
How is this going to affect your online business?
Depending on what you sell, it may not affect you at all….or it possibly could increase your profits.
John Jantsch wrote a great post on his blog about how Small Business is the Economic Bailout.
While large businesses have cut 170,000 jobs in the last six months, small businesses have created 200,000 new jobs.
The vast majority of my readers are in the small business category. So those bleak financial pictures you’re been seeing don’t apply to you. Sure you may have a little more trouble if your online business model relies on borrowing cheap capital, but again the majority of my readers don’t take out large business loans to keep their internet business moving.
A few quick points:
1. Price Competition – When money is in short supply, you start looking for ways to save while living the same basic lifestyle. This means you turn to lower cost solutions. In many cases, that’s exactly what the internet provides. With the lower overhead of online businesses you’re going to see many of them start pointing to their lower costs compared to local stores.
2. Unreliable Jobs – If jobs become less reliable, people are more likely to turn to the internet for home based work. This means all those of you who sell something related to work at home or producing a positive ROI for small businesses are in a good position. In bad periods, business opportunities increase instead of decreasing.
3. Affluent Marketplace – Customers who purchase online are more affluent on average than those offline. It’s a good time to ask yourself though whether you’re selling to those with or without money. Take a look at this blog article: Recession Proofing the Affluent Market. Their advice is to add savings and value instead of cutting rates (good advice).
Basically, it’s going to be your choice as a small business whether you decide to participate in the recession or not.
You might find sales of some of your products decreasing. OK. Move with it. Wherever sales are decreasing, you’ll be able to find somewhere else where sales are increasing.
I have a product where sales have been declining over the past two months. So what? I have others where sales are booming.
This just gives you another reason not to base your entire business off of one product or service. If you’re in the position where you see some of your sales decreasing, ask yourself, “What are people buying?” People may not be buying what you’re selling, but they are buying something. Get in front of that hungry market.
If you’re in competitive advertising markets you might even get a nice little secondary effect. If your competitors start worrying about a recession (and decide to participate in it), they’ll cut back on their advertising…giving you lower cost advertising sources!
All in all, now is not the time to cut back.
It’s simply time to examine all the aspects of your business.
- How can you produce more leads at lower cost?
- Are you following up with your customers at every step in the process?
- Where can you add value and other additional sales to your funnel?
- What else are your customers buying?
- What is your competition doing that you could model?
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