It seems like there’s finally a light at the end of the Coronavirus tunnel. It’s not over yet, but things are slowly starting to open up.
The issue is nobody knows how long the scars from this crisis will last.
Will things go back to normal right away? Or will we realize there is long-term damage that we don’t even realize yet?
- Will people who got laid off get their jobs back and be able to keep circulating dollars in the economy?
- Will restaurants be able to survive if they’re forced to reduce their capacity?
- Will the stimulus packages lead to inflation?
And there are countless more unknowns. So even as things slowly start to recover, many digital agency owners and aspiring entrepreneurs remain fearful about the future. “Is now a good time to launch my business? Will I really be able to grow my business over the months ahead?”
The good news is that we can look back at depressions and recessions throughout history and learn lessons to apply to our current situation. Countless businesses have been launched and grown during economic downturns, and we can do the same.
Keep these principles in mind to survive and thrive…
Don’t Stop Advertising
You’ve heard the term “Fight or flight.” They say these are the two natural human responses to fear.
But the vast majority of people actually fall into a third category: freeze. When most people are faced with a dangerous threat they become deer-in-the-headlights. They’re overwhelmed by the intensity of the situation and they don’t know how to respond, so they do nothing.
The same happens in recessions. Many businesses are overcome by fear and don’t know what to do, so their natural reaction is to do nothing and wait for the problem to go away. As days turn into months, they run out of money and have to close their doors for good.
The ones who survive are those that steer into the problem. They know they can’t control the situation, but they can control how they respond to it. So they keep advertising, but they find creative ways to do it inexpensively.
Here are just a few examples:
- At the beginning of the Great Depression, Post was the leading cereal brand in America. As the crisis intensified they slashed their advertising budget. Meanwhile, Kellog’s doubled their spending, and by the end of the Depression, they had taken the #1 spot.
- In the mid 70’s there was a global energy crisis. (You might remember old news footage of massive lines at gas stations.) While most automotive companies panicked, Toyota increased their spending and by 1976 they were the #1 import car in America.
- An 8-month long recession in 1991 pushed McDonald’s to reduce their advertising budget. As a result, sales dropped by 28%. Meanwhile, Pizza Hut and Taco Bell increased spending, and their sales grew by 61% and 40% respectively.
The point is, your customers still need to buy products and services to solve their problems, and you need to let them know you’re still here for them. Do whatever you must to keep talking to them, letting them know you’re still open, and how they can do business with you to make their lives easier.
Which leads to the next lesson you need to learn…
There Is Still Money Out There
In a recession, there might be less money circulating in the economy, but the number isn’t zero. No matter how much things contract, there is still money changing hands every day.
Thomas Edison started General Electric in 1892. Less than a year later the Panic Of 1893 hit, where the economy shrunk by 40% for nearly a year and a half.
Most businesses probably felt like it was the end of the world. But Edison knew that America still needed the energy to run our factories and light our homes. Today GE and Edison are one of the greatest success stories in American history.
Even in our current crisis, people are still spending money. It might as well be with you!
Recessions Remove Competition
Warren Buffet once famously said, “When the tide goes out, you see who’s been swimming naked.” What this means is that when the economy is doing great, it’s easy to make money.
Look at the Dot-Com Bubble in the late ‘90’s. There was so much hype around tech startups that any internet-related business was making an absolute fortune. Money was flooding into Silicon Valley in record amounts.
But when the bubble burst it all came crashing down. Overnight, companies that were trading at record highs were suddenly wiped out. But guess who wasn’t: Amazon, eBay, and Google. Today they’re still among the biggest companies in America.
If you have the will to persevere, and more importantly products that genuinely improve the lives of your customers, a recession can actually be a boon for business. That’s because all of the money that previously flowed into overhyped businesses will now flow into your business.
Bigger Problems = Bigger Profits
Entrepreneurship is all about solving problems. And the good news is that during recessions there are bigger problems than ever that need to be solved.
The energy crisis we mentioned above saw the birth of another juggernaut: FedEx.
While Fred Smith was studying economics at Yale in the mid-60’s he wrote a paper explaining how a business could offer overnight delivery by using a hub-and-spoke strategy. When the energy crisis hit and fuel costs skyrocketed, Smith knew businesses needed a more efficient way to ship products.
His professor had given him a C on the paper, but he decided to bring his idea to life anyways, and today FedEx does $65 billion in revenue.
Ask yourself what businesses are struggling with today, and how you can think outside-the-box to solve these problems.
Business is an exchange of value: you give me a product or a service, I give you dollars.
But business is also about something much deeper. We do business with people that make us feel good. In a way business is a vehicle for us to connect with each other.
Of course, it’s important to have a great product. Of course, you have to deliver real results. But the businesses that become the most successful make people feel better about themselves and the world.
Walt Disney launched his business right as the Great Depression began. He knew that more than ever, people were going to be desperate for hope and positivity. And looking back now, he could never have imagined how right he was and how big his company would one day become.
You’re reading a blog about building a digital agency, so chances are you’re not an aspiring cartoonist! But you can still take a page out of Walt’s book. Ask yourself how you can deliver your service in a way that puts a smile on your customers’ faces. How can you do business in a way that gives people hope and reassurance?
The Most Important Lesson Of All
These are all timeless lessons you can harness for your own success.
But after years of being an entrepreneur, I’d like to add a lesson of my own: there’s never a right time to start a business. Even when the economy is strong, success is never guaranteed.
No matter what the stock market is doing, and no matter what the forecasts look like, entrepreneurship will take everything you have. It will make you dig deep and it will force you to grow. And it will also be the most rewarding and most fulfilling journey you ever take.
So you might as well start now!
Leave a comment below and let us know what business you’re trying to launch or to grow, and let’s give each other some encouragement.