Reasons Why the Recession is Actually Good for Businesses

Posted by on October 2, 2009 in Business Management [ 2 Comments ]

Eighty-one US banks have closed so far this year, and unfortunately for businesses, misery loves company. With high-street staples such as Circuit City closing, and many other big brands scaling back operations (Dell has closed 140 stores, Sprint/Nextel 125, even Disney has stopped supplying the public with cartoon merchandise in 98 locations), one might have to read these five reasons why the recession is good for businesses in order to get any sleep at night.

1. Value Engineering

While recessions may sound the death-knell for money lending and expansion, they breed frugality. In a shrinking economy businesses are encouraged to look inside themselves, find out where they are wasting money and stop it. By “value engineering”, the process of reducing the cost of the elements that go towards making a product, a business can cut its costs in a sustainable way. Using less packaging, for instance, will not impact the quality of the product but will create savings that will translate into great profit margins, even more so when the recession wanes.

2. First-class Fifties

Business-development advisers suggest that in an uncertain economic climate, the one sector of the market that will still show signs of growth is the over-fifty marketplace. If a business can find a way to market its products to appeal to this demographic, it will have found a whole new revenue stream post-recession. Not only that, but it will also provide the company with valuable experience at broadening their customer base and marketing to consumers that they haven’t approached before.

3. Analyzed Ideas for Customer Focus

In a game of Russian Roulette, no-one wants to add another bullet to the gun. In business, as with roulette, adding more risk to a risky situation can not only be costly, but fatal. That is why all ideas need to be thoroughly explored and analyzed to make sure that they are customer-focused. Businesses who love their own product or invention are good, but the recession demands that companies concentrate on giving the customer what they really want. A recession makes sure that businesses are providing products and services that their customers are excited about spending their money on – products that do not meet customer needs are promptly killed off.

4. Competition-Killer

If one business can survive the difficulty a recession brings, it is possible that its competition will not have been so lucky. If a rival business fails, the gap in the market left in their wake is an opportunity for growth and expansion for the most productive company.

5. Toughness

A business that has bore the brunt of a recession will be mentally tougher than a post-recession start-up trying to muscle in on their territory. The challenges that it has triumphed over will create a bond and determination that would be difficult to form in less tumultuous times, and one no amount of training could mimic.

Guest post by Jack Ratcliffe, who writes at The Credit Letter about the latest Citibank credit cards and more..

2 thoughts on “Reasons Why the Recession is Actually Good for Businesses

  1. avatarEllen Arndt

    I agree with the competition factor – that’s why it’s necessary to have a plan for superseding competition and differentiating yourself (your business) from the others. Great advice and commentary!

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