7 Tips For Entrepreneurs To Survive The Global Economic Crisis
Written by: Aleksandr Iurev, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The current global economic crisis is shaping up to be one of the most challenging events in nearly half a century. But that’s no reason to be paralyzed by fear, anxiety and pessimism. Just accept it as the new reality and continue going forward.
In past recessions, naturally many businesses failed, but the fact is that quite a few survived and even thrived. How is that possible? Because in difficult times great endeavors and companies have the chance to rise above the fray. The strong, smartest and most agile companies will survive amid the challenging times.
For example, Google raised capital following the Dot-com bubble and grew in the downturn. Uber also enjoyed a similar trajectory in the 2008-09 recession, and of course Zoom skyrocketed to fame and success during the economic downtown in the first year of the COVID-19 pandemic.
The question you need to ask yourself is: What are you made of? Are you one of the victors, or will you be among those confused and hapless souls going down with their ship? If you’re reading this article, then I’m sure that you want to be one of the winners and succeed.
Nearly 14 years have passed since the last major economic downturn, and as I mentioned above, the pandemic also saw the global economy sputter and freeze. This current crisis, however, is unique in many ways, such as the fact that it comes amid a global energy crisis and a new Cold War between Russia and NATO.
Below is a list of 7 tips that I put together with help from very knowledgeable and experienced experts. Of course, every company is unique and faces different circumstances. So, please note that this is not a one-fits-all solution. Take the parts that pertain to your business and needs. I hope it helps you to weather the storm.
Get pumped up to beat the competition
During a recession, your competitors are an even greater threat to your survival and prosperity. Find opportunities and look for ways to win more customers away from your competitors. Try to differentiate your brand in a meaningful way — maybe lower your prices, or provide better quality products or service, or overall make a better customer experience. Stand out in various ways that really matter to your target audience and which will secure their trust. If you don’t have a loyalty program already, then certainly start one.
Trim expenses
Slash or entirely remove secondary and non-essential expenses. For example, you might want a moratorium on business travel since that often leads to many other extra bills. Or have your workforce go remote. Next, decide which employees are crucial to your operation and who is less vital. Digital tools can replace extraneous employees. Or perhaps one excellent employee can do the work of three. Also, ask suppliers for discounts in return for loyalty.
Prioritize your investment strategy
After you understand where you can cut costs, make sure that you know where you should not cut and where you need to invest in order to grow. Then, come up with a strategy to deal with this period of austerity. Remember, you still have to grow as a business. You can’t be intimidated by the economic crisis. What are your strategic directions and goals? Do you absolutely need to invest in R&D, or what about Marketing and PR? Long-term branding, PR and marketing strategies, such as social media, might not pay off immediately, but they have a much higher return on investment (ROI) than short-term strategies. When the economy picks up again, you’ll have the chance to gain a bigger share of the market that you never thought possible.
Diversify revenue streams
Increase your chances of survival by diversifying revenue streams. For the short-term, create new means of generating income; this way, if the recession wipes out one revenue stream, you'll have ample backups to keep your business afloat. Minimize risk by having plenty of options. For example, you could start selling new types of goods, start a blog with advertising or offer new services to your customers. This is only a temporary measure because, ideally, you should focus on your main business activity.
Be creative with funding options
Fundraise with a more cautious plan than you did previously. Show a path to profitability and convince existing investors to set aside more money if needed. It’s better to raise money at a low valuation than to go bankrupt. Startups, for example, should consider alternatives to the VC funding model. One option is revenue-based financing. Under this model, startups can raise capital from a financier who claims a percentage of their future revenue.
Build a team — freelancers
Freelancers are less expensive than full-time workers who expect benefits. In contrast, a recent study found that 67% of freelancers preferred better salaries and fewer benefits; they cherish and thrive on being independent and versatile. The portion of full-time freelancers in the U.S. has climbed from 17% in 2014 to 28% in 2019. Today, there are 57 million freelancers in the U.S. This option allows you to tap into excellent labor opportunities at minimum cost and headache.
Believe in the future
Finally, even if your situation looks bleak, continue to focus on the long-term and believe that you’re going to make it. Don’t get down on yourself. Chances are that you’ll pull through. If you’ve been able to cut costs to a reasonable level and as long as you’re not bleeding piles of cash, continue to go forward and hang in there. Eventually, many of your competitors won’t have that stamina and they’ll fold, and you’ll be one of the few left standings.
Good luck, and enjoy the ride! It might be bumpy, but we will make it!
Aleksandr Iurev, Executive Contributor Brainz Magazine
Aleksandr Iurev is a serial entrepreneur, with many years of experience in launching startups. His most recent is Pocketfied, which will radically disrupt the mobile app development industry with its highly innovative technology and service. Overall, Mr. Iurev has 20 years of experience in the IT sector, as well as in DevOps, and Information Security. He cut his teeth in Tech working in IT security for the largest banks in Russia, as well as for top IT companies. That experience protecting clients from hacker attacks is one reason why he attaches top priority to building secure systems so that users can be certain they're protected.
