Opportunities Rise as GDP Drops
At first glance, the news that the UK economy is on the verge of officially being declared in recession could seem like a wholly negative development for business. However, whilst the news of a recession will likely herald difficulty, it also offers opportunities which entrepreneurs and businesses should be aware of. To echo the words of Winston Churchill, “a pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty”.
Figures from the Office of National Statistics are anticipated to indicate just how difficult the situation could be for the UK, with The Guardian reporting that Britain’s second quarter economic slump is “expected to be the biggest quarterly drop of any G7 economy”. The G7 comprises of the UK along with France, Italy, Canada, Germany, the US and Japan, suggesting that the UK could be more adversely affected by the current pandemic and its associated financial difficulties than other big players in the global economy. However, as per Churchill’s iconic statement, there are reasons to be optimistic, and it’s important for businesses to recognise that the difficulties also offer opportunities.
During economic downturns, many businesses reign in their spending and investment – they press the panic button. However, in doing so, they retreat from the market in a way which offers opportunities for competitors to make an impact. When Sam Walton, the founder of American supermarket giant Walmart was asked “What do you think about a recession?”, he famously responded “I thought about it and decided not to participate.” The point that Walton was making is that firms which hold back their business plan due to a recession will feel the negative effects.
The possibility to make market gains during a recession is particularly evident when it comes to marketing and advertising. Studies throughout previous downturns have shown that when businesses reduce their marketing presence, other firms can gain a foothold in consumer awareness. The same applies for companies in B2B. Whether you raise awareness of your firm through display adverts, publicity, social media or another marketing medium, if your competitors are reducing their presence, it’s a good time to take advantage and increase yours.
The cost of marketing could also be reduced during a recession, as could other traditional business outgoings. During downturns, uncertainty in the market can lead to discounts and reductions in prices from suppliers, and can offer businesses the chance to negotiate better deals and packages for services. Although this isn’t always the case, during a recession you may find there’s more flexibility, which in turn can allow you to stretch your budgets further. If a country has also reduced its interest rates to encourage spending during a recession, there are opportunities for better value credit terms to help raise capital to invest in a business.
Recessions often lead to long term changes in the economy. Sometimes, those changes can completely alter the business landscape. The fluidity of downturns mean that there are often more opportunities to shake up the traditional economic outlook. To capitalise on those opportunities, businesses need to be sharp, ready to act and ready to invest. Even if the UK does officially enter a recession, being optimistic in your business plan now could make all the difference when the next upturn comes around.