Why I Love Recessions!
The sky is falling. The economy is in the tank. Your 401(k) will soon be worthless. No one is spending. Job cuts are swift and deep. We're all going to die painful deaths. Right?
Nope. We all go through tough economic times, but they are the best times to make real money. People who pay close attention to the market, the economy, and the world can make lifetime of wealth in these periods of time. It just comes down to the right perspective.
Think about it this way: A forest fire isn't always a bad thing; in most cases, it helps regenerate the forest. After the deadwood and underbrush are cleared out, the ashes serve as fertilizer and help new growth appear. The strong trees are also better off with the new nutrients and with space in the canopy.
What are the great ideas that people will use to make billions? What new technology can be used to make it easy? In tough times, you can find a ton of great buys. Real estate, equipment, A-player employees, inventory, technology, and even competitors are all on sale. Take advantage of the downturns to buy even cheaper and at a greater value than you normally would.
For example, if you are thinking about pulling back on marketing efforts when the economy goes down the tubes, don't. The same way you want to get more value for your purchasing, you can get more value for your marketing.
There are two big forces at play in your economy at any time -- your business and that of your industry. If everyone in your industry is cutting their marketing budget by 50 percent, you might be tempted to do the same. But imagine if you keep it at the same level. You're basically getting a 100 percent increase over their spending. This is a great time to honor your commitments and continue your marketing plan, all while gaining market share! Plus, your vendors will remember that you stood with them during the hard times and helped them make it through the downturn.
When the economy is down, it’s a great time to "sharpen the saw" and learn new skills. If one of your departments is less busy during a downturn, it may be a great time to get them some professional education. When the downturn is over, and it WILL end, you'll be ready for the new upswing in demand.
A downturn often means that borrowing rates go down as well, so if you want to expand, it’s a great time. With cheap money for strong businesses, it’s a fantastic time to upgrade facilities, buy new equipment or even a competitor. (Note that if you are flushed with cash, the rate of return on your money market accounts is low, so you might as well put some of that to use as detailed above.)
If your competitors are struggling to get by, it’s s a great time to poach key employees. You can probably get their best and brightest now if you can prove that you are strong enough to weather the storm. Frankly, just looking at a tough economy in a positive light might be enough to get an employee who is on the fence - employees are bright and want to work for companies that are strong enough to make it, and can see this as a high growth period.
One of my favorite Wall Street traders, Art Cashin, has said, "Don't bet on the end of the world… because it can only happen once." Remember this when you get scared. You’ll have a choice to make. You can complain, pull back, and live in fear until the media tells you it’s time to breathe easy. (But they will miss all the opportunity and by the time they tell you, it’ll be too late.) Or you can recognize that this is the time when fortunes are made. This is the time when entrepreneurs can turn small businesses into booming enterprises by taking smart risks. It’s the time that entrepreneurs show the rest of the business community why we are the engines of growth: While big public companies are downsizing and buying less, we flourish. So get out there and take advantage of this opportunity -- real estate, equipment, acquisitions, employees and money are all on sale! This is the time you have been waiting for!