Disruptive Thinking During the Global Recession
“It’s not the strongest that survives, nor the most intelligent; it’s those who adapt to change,” is a quote famously attributed to biologist Charles Darwin. While no one actually knows who made these remarks, for small businesses and sole traders, the message is crystal clear.
All businesses must adapt to survive a recession, as the world has changed. The economic pain may go on for a long time. Recessions can be local events or international earthquakes, such as the 1929 Wall Street Crash or the 2008 Financial Crisis.
All recessions are tough on small businesses, with global downturns affecting millions of people worldwide. They are especially hard if you’ve invested time and capital in an idea, only for the economy to collapse. For you and the staff you employ, it can feel like the world has pulled the rug from underneath you.
In this article, we’ll show you how lateral thinking can help you overcome the recession and adapt to a fast-changing world.
What is a Recession?
In simple terms, a recession is when the economy stops growing and starts shrinking. It can lead to unemployment, declining incomes, and a drop in production and retail sales too. It’s usually the result of volatile, unpredictable events, such as a spike in oil prices or the collapse of the US housing market, like in 2008.
Recessions are not all the same.
Some are long, short, or confined to a specific area. Some are epoch-making, while others may seem invisible. One thing is for sure, in our chaotic, unpredictable world, it’s not a question of if a recession is coming, but when.
When the Facts Change, Change Your Mind
One of the lessons from 2008 is that the most successful companies are those who adapt fastest to change. As even in dark times, a brighter future is possible, so consider how you can pivot your business to a new economic landscape.
Recessions often lead to ‘creative destruction’ where yesterday’s technologies, products, and services fall by the wayside, and fresh ideas emerge. So whenever there’s an economic rupture, you need to embrace lateral thinking to outwit the competition.
We will always need disruptors to challenge the status quo. So why not look at popular trends and see if there are gaps in the market? Like you may have noticed there’s been a surge in electric bike sales since 2018. City dwellers have always needed to move fast, but they now want to travel sustainably and stylishly while keeping fit.
Flip the Switch
More recently, small business owners have found disruptive ways to flourish during this recession. XITE Energy, a health drink startup in England, has given out 24,000 cans to NHS workers and shifted their direct-to-consumer (DTC) model online overnight.
While a Berlin-based food startup, Fraulein Kimchi, serving Korean dishes for local companies and foodies, switched from selling outdoors to home delivery by using Facebook to reach their customers online.
Google has even changed its Maps app, highlighting restaurants offering takeout and delivery options, with an order process integrated for small businesses.
Change is the only constant in business, and sometimes that involves thinking the unthinkable.
Dollars, Cents, and Rent
Even during this tumultuous period, the one thing all businesses need is cash in the bank. While disruptive technology, apps, and services will always grab the headlines, taking a creative approach to your balance sheet can pay off during a recession.
If you’re keeping your head above water right now, then here are a few practical things you can do to reduce your overhead:
- Reduce your accommodation costs by moving elsewhere or signing a longer lease for less rent.
- Cut back on your utility bills, even if it’s only a 5% drop in your gas or broadband bills — it adds up over a year.
- Ask your debtors to see whether they’ll accept 45-day instead of 30-day net payments. Improving your cash flow can make a huge difference during a recession.
- Likewise, you can offer 1-2% discounts to your clients if they pay early for your services, thus improving your cash flow.
- If you have debt, then maybe refinance it and take advantage of lower interest rates?
When it comes to debts, prioritize them from highest to lower, and pay the highest first, as they will bite deeper during a recession and cost you more down the line.
So when the garden is looking rosy, you don’t have to cut to the bone, but ask whether you’re getting your money’s worth? If in doubt, then hit pause and look for cheaper alternatives.
Spot Gaps in the Market
When markets collapse under financial pressure, people lose jobs, and sadly many businesses will fold.
It’s a stressful time for many of us, but as the world changes, new trading patterns will emerge. Countries may re-localize their supply chains, from food to medicine, giving smaller firms opportunities they’ve never had before.
When the economy changes, people’s lifestyles evolve, too, so think about what people might need, from delivery services to new infrastructure. In Italy, for example, a manufacturing company, Nuova Neon Group, is aiming to produce plexiglass boxes to kickstart beach tourism and help bars and restaurants trade again.
In 2008, thousands of businesses collapsed, and millions of jobs were lost, but the world did recover, in part due to smartphone apps and new technology. Some companies recovered sooner than others. Just a year later, Mailchimp went freemium and grew 5X in the midst of the Great Recession. As we said before, when the facts change, it is key to change your outlook.
Technology and Agents of Change
Airbnb and Uber emerged as winners in 2008, offering creative and affordable alternatives to the hotel and taxi industry, respectively. The gig economy has always existed, but it goes into overdrive during a recession, where self-employment offers immediate solutions.
Smaller and medium-sized businesses also enjoyed success stories from this period. One US firm, in particular, took advantage of empty retail fronts during the last recession. Inwindow Outdoor responded by creating flamboyant vinyl ads for store windows in New York, partly to hide evidence of an ailing economy.
They innovated by adding interactive video screens and changed their name to Inwindow Interactive, allowing people to touch and engage with their client’s ads.
So while recessions are painful events with human costs, they can also bring about change and force people to try something new.
Be Part of the Solution
With undersea cables binding us all together, there’s no escaping a recession in an interdependent world. Downturns are a feature of a global economy and often act as a catalyst for creativity, or as some people like to say — never let a good crisis go to waste.
How we shop, travel, and work is going to change radically, so businesses have to get creative and think differently to survive. Remember, there’s no normal to go back to, but light will emerge from the rubble.
If your business model is flexible, or you have a new idea, then you can potentially thrive during a recession. With economic disruption comes opportunities, and remember, it doesn’t matter how big or smart your competitors appear. The most successful businesses trading today are those who continually adapt to change.
If you’ve had a hard time of late, then Namecheap is here to help with our #CreateFromHome program, to support you through this difficult period. In a recent customer email, we announced we’re waiving hosting fees for businesses that can’t pay renewal payments right now.
If you have any questions about fees or any other matter, then you can contact our 24/7 Customer Support team at any time.