The Three Things You Can Do During The Recession

Navigating a recession can be daunting, but there are strategic steps you can take to not only survive but potentially thrive during these challenging times. Here, I outline three key actions you can implement to improve your situation during a recession, whether you’re an individual or running a business. These strategies focus on understanding your financial position, seeking out new opportunities, and maintaining a resilient attitude.

Be Prepared

Knowing Revenues and Expenses

The first and most crucial step during a recession is to have a clear understanding of your financial situation. This means thoroughly analyzing your revenues, expenses, and overall financial commitments. By doing this, you can identify potential vulnerabilities and prepare for various scenarios.

Here’s what you need to consider:

• Revenue Analysis: Understand the stability and duration of your income streams. For businesses, this means knowing how long your clients are committed to you and what your sales pipeline looks like.
• Expense Management: Identify which expenses are essential, which can be renegotiated, and which can be eliminated. This helps in maintaining liquidity and financial flexibility.
• Risk Assessment: Recognize your Achilles’ heel—areas where you are most vulnerable. This could be a significant client, a key supplier, or any other factor that could disrupt your operations if it fails.

Taking a worst-case scenario approach allows you to be prepared for the worst while hoping for the best. As the saying goes, “Hope is not a strategy.” By understanding your financial position deeply, you can make informed decisions that will help you navigate through the recession more effectively.

Seek Opportunity

The second strategy involves seeking out market dislocations—opportunities that arise from the economic turbulence. Recessions often disrupt the status quo, shaking up markets and creating inefficiencies. These disruptions can be fertile ground for new opportunities if you know where to look.

Consider the following:

• Market Shifts: Pay attention to which areas are experiencing significant changes. Some old industries may decline while new ones rise. Identify these shifts and position yourself accordingly.
• Investment Opportunities: Look for undervalued assets or businesses. Some investors adopt a “run into every burning house” mentality, meaning they seek opportunities in distressed markets where others might shy away.
• Innovation: Focus on areas where you can provide unique solutions to new problems that have arisen due to the recession. This could mean developing new products, services, or business models that address current needs.

By actively seeking out and capitalizing on these dislocations, you can find growth opportunities even in a downturn. It’s about being proactive and seeing the potential in the chaos.

Positive Momentum

Keep Running

The third strategy is about maintaining momentum and resilience. It’s crucial to keep moving forward, even when the broader economic environment looks bleak. This involves staying focused on your goals, continuing your daily efforts, and maintaining a positive attitude despite external challenges.

Here’s how to stay resilient:

• Consistent Effort: Regardless of the economic climate, continue to put in the work every day. This could mean making daily calls, following up on leads, or consistently marketing your business.
• Stay Intelligently Oblivious: While it’s essential to be aware of the broader economic trends, don’t let negative news paralyze you. Focus on what you can control and keep pushing forward.
• Motivation and Positivity: Draw inspiration from personal stories and philosophical insights. For example, during the 2009 recession, I kept applying for jobs despite the grim economic outlook, eventually finding a position by staying persistent and not letting the negative news get me down.

One valuable piece of advice I received was to “keep running.” This means continuing your efforts no matter what the external environment is like. The more you practice, the “luckier” you get. Just as in sports, consistent effort over time leads to better results.

Recap and Conclusion

In summary, there are three key actions you can take to improve your situation during a recession:

1. Know Your Revenues and Expenses: Understand your financial position, manage your expenses, and assess your vulnerabilities.
2. Look for Dislocations: Identify and capitalize on market disruptions and inefficiencies to find new opportunities.
3. Keep Running: Maintain consistent effort, stay focused, and keep a positive attitude despite external challenges.

By following these strategies, you can navigate the economic turbulence more effectively and position yourself or your business for future success. Remember, recessions are not just times of challenge but also of opportunity. Stay proactive, resilient, and focused on your goals.