Unfortunately, no one has a crystal ball to see what next year will bring for entrepreneurs and the U.S. economy. With an election year on the horizon, the one thing that can be guaranteed with certainty is, good or bad, 2020 will bring volatility. The market has a long-standing hate relationship with ambiguity, so entrepreneurs should buckle up for a wild ride.
Election cycles introduce an unwanted variable into the decision-making of business leaders, and the nature of this particular election may cause entrepreneurs to flinch. The difference between a business that thrives, and one that struggles will boil down to one key element, and that is preparation.
Preparing for Uncertainty
There are numerous indicators that, after eight years of strong business growth, a recession may come in 2020. Since the Federal Reserve cut interest rates in July for the first time since the last recession, consumer fears are growing and perceptions have a way of becoming realities.
Additionally, the bond market, an accurate predicator of the last seven recessions is showing a trend towards recession. Couple that with trade wars, lower GDP, lower corporate earnings, an election year and lower corporate spending and many recession indicators are flashing red.
An Opportunity to Compete
While it may seem paradoxical, for prepared entrepreneurs, a recession can be an ideal time to gain advantage and grow. While the competition is retreating and waiting for better economic conditions, it is an ideal condition to stand out.
Many entrepreneurs will enter these uncertain times and attempt to operate in a recession … for the first time. And for those businesses leaders who may have forgotten the feel of market constriction, we offer these three ideas for continued growth:
- Focus first on how a recession will change the needs or requirements of your customers. Opportunities abound with changes your customers are preparing to endure an economic downturn. Anticipate they will need to cut costs, delay projects or modify their offers – help them. Post-recession success is born from loyalty and services created in the most difficult of times.
- Run toward the roar. The best time to promote and market your business is when your competition is sitting down. Our multi-year research at TrueSpace shows how a one-year retraction in promotion and awareness can take two to three years to regain the same position the company had before the recession. In contrast, the businesses that effectively marketed and promoted their business during the downturn were top of mind at the beginning of the recovery.
- Embrace the Gig Economy. One thing is certain during a recession, every business is impacted. Therefore, preparing for this situation requires a leader to come to terms with the need for some level of cost restriction. A great source for cost effective and efficient talent is the gig worker. According to Forbes, a whopping 36 percent of workers, 57 million people, are currently part of the gig economy. Believe it or not, a lot of current expertise and experience is held by Baby Boomers, who are at the age of retiring. Only, instead of completely retiring, Boomers are shifting their roles by consulting new businesses, part time. In turn, business owners are able to leverage the consultant’s knowledge and experience without the need to pay the salary or provide the benefits that you would for a full-time employee. It’s a temporary win-win as the growing business owners gets the incredible talent they need to grow and Boomers get the opportunity to keep their foot in the game.
The Takeaway
No matter what specifics 2020 brings, preparation and predictability will be the markers of whether a business will sink or swim, stand down, or stand out. 2019 was a great year for many, and if there’s one thing that’s certain, 2020 will be one of many shifts and cycles. Entrepreneurs can prepare by analyzing trending patterns from past election years, finding a mentor who has grown during times of volatility and looking into customer and talent metrics for retention opportunities. Successful entrepreneurs will be the ones who will effectively prepare for the coming storm and use the impending situation to compete and grow.