The Pain Of Recessions Is Often Self-Inflicted

The Pain Of Recessions Is Often Self-Inflicted

Is the sky going to fall if the projected recession actually comes to pass? That’s probably what you’ve been hearing. There are all sorts of doomsday predictions floating around right now, terrifying business owners all over the country. Will your business come crashing down if we enter another recession? Only if you let it. 

The problem with recessions is that many business owners react rather than respond. Some businesses are legitimately taken down by recessions, but for most, it’s the panic that does their businesses in. In a fit of emotional overwhelm, they don’t make rational decisions and instead jump to major changes that only exacerbate their problems. This is why I say that, for most people, the painful effects of a recession are often self-inflicted. 

What A Recession Is And Is Not 

A recession happens when the growth of the economy shrinks. Two consecutive quarters of economic decline are considered a recession. 

In general, we see lower levels of economic output, employment and consumer demand during a recession. That sounds alarming, but let’s keep it in perspective. During The Great Recession of 2007-2009, the U.S. GDP only shrank by 4.3%. 

During a recession, the economy doesn’t slam to a halt, nor does it drop by 40%. A 4% reduction in revenue would hardly be catastrophic for your business, and it’s not catastrophic for the U.S. economy. 

The Real Catastrophe Is The Overreaction 

What makes a recession so devastating is when business owners freak out and make emotional, overreactive changes that end up crashing their businesses. They slash staff and restrict all their spending in an effort to conserve what they have rather than seeing the opportunity that a recession presents. 

We see this a lot in the marketing industry. The first thing businesses cut when they see a recession on the horizon is marketing, which boggles my mind. If you lose clients during a recession, you can’t replace them without marketing. 

That’s the moment the cascade of disaster starts. You lose clients, then you can’t get new business because you stopped marketing. Then revenue dips, you have to fire employees, and before you know it, your business is running on a shoestring and putting out shoddy work, which causes the last clients left to jump ship. You might blame the recession, but I blame the overreaction. This doesn’t have to happen. 


Recession Brings Opportunity 

There are businesses in your industry that will really struggle in a recession, and that creates an enormous opportunity for those who choose to make smart choices. The key to riding out a recession and coming out stronger is managing fear—both yours and your clients’. 


Managing Client Emotions 

Clients leave during a recession because they are wary of spending money. Your job is to manage their feelings and show them that a recession is no time to stop spending money on their businesses because it’s an opportunity to scoop up clients of other struggling firms in your industry. Some people will panic when a recession hits, and those who don’t will thrive. 

It’s important to get your clients off the ledge before—not after—they’ve made a rash decision. Guide them toward the right decisions for the long term and talk directly to their inner monologue. If you are able to help them articulate something that’s in their head already, they’ll trust you and you can really help them. 


There Is No Perfect Decision 

Don’t let fear of making a decision keep you from solving a problem. Think creatively about how to solve your recession-related issues. Be decisive. Go forward confidently. You can pivot later if necessary. 

 

What story are you telling yourself? 

Understand the story in your head. Sometimes telling yourself you’re a bad business owner or a poor decision-maker becomes a self-fulfilling prophecy. Everyone struggles when the market changes for the worse. Go easy on yourself. Find someone who can help you see the reality of your success and inspire your confidence. 

  

A Recession Is A Dip, Not A Disaster 

It’s important to recognize that a recession is a dip, not the end of your business. You decide whether you survive or thrive. Don't make decisions on emotions. If you use data and adapt, your business can come out on top—even in a recession. 

Cameron Scott

Founder of Outpace Group | Lead Generation Built For Executive Coaches & Consultants.

2y

Excellent article Robert there are some great points to take on board here

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