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Economic Depression: Is Your Business Ready for the 2013 Recession?

Note from Danny: This is William’s second guest post here in two weeks. I asked him to write this second post after a phone conversation in which he shared with me some insights about where things might be going *really soon*, and what business owners and entrepreneurs (like you!) might need to do about it. I strongly recommend that you take the time to read this post, subscribe to his free email course and quarterly updates.

What 2013 Recession?

Who said there’s going to be one?

Several people, all at pay grades higher than ours, that’s who!

USA Today recently ran an article telling us the fragile economic recovery is showing cracks. It’s like an Olympic one mile runner running out of gas just as the last lap bell sounds – just when he should be kicking it in high gear.

But wait, you might say, didn’t we just come out of a big recession? Aren’t we supposed to have at least a few good years before the next economic depression? Yes. And yes. But it might be happening anyway.

You might not think this matters to you as a marketing entrepreneur, but boy does it ever…

Scare tactics? Not really…

Is this just one of those general scare tactics bogeyman things? No, but judge for yourself.

Consumer spending, which accounts for 70% of the economy is weak.

Government data shows employment is having the worst time in almost a century to recover. Even government jobs are taking a hit, for the first time in forever.

That’s not all. Commercial real estate lending, after a nice recovery, is falling back.

And if that’s not enough, Americais experiencing an unusually severe drought.

The three next largest economies in the world ,Japan, Europe and China, are all undergoing economic difficulties. As our largest trading partners, there’s a spillover effect that affects America.

If you’re still not convinced, here’s a Bloomberg video from a respected economist saying we’re already in recession. (Warning: it’s long, 12 minutes).

All is not gloomy, economic depression though. There are several indicators that show the economy is still recovering. That means it’s not a sure thing the economy is going to tank in the next few months.

This is like a weatherman saying there’s a hurricane coming your way. It may miss you but it may not. What are you going to do? Sit back and say the weatherman has been wrong before? Or prepare?

If you’re like me, you’ll do both. we can argue all we want. The smart thing is get prepared and quickly. Even if the talking heads are wrong, there is absolutely no harm in getting some basic preparation out of the way.

Take Action Now

My previous post here on Mirasee outlined the basic strategy for entrepreneurs and marketers in the online arena. If a recession hits us in the next year, here is what you can do to prepare:

1. Look at your offerings. Is there a new way to package or position your content to create a product that will be of compelling value to your subscribers when they get hit by a recession? If you had in mind to sell high priced coaching, you might want to speed that up so you can signups (and payments) before the recession hits. It may not, let’s be clear, about it, but you have to factor the growing possibility into your plans.

2. Prepare alternative positioning strategies. You have some time to think of the positioning of your blog, website or other faces of your enterprise to suit changing times. It might be a good time to engage with your audience and ask how they would react if what the experts are fearing comes true and they were to be faced with an unexpected recession. First rule of content marketing: listen to your audience. Without spreading alarm or creating a negative vibe, you might just want to see if there’s a way you van get some advance heads-up from the source of your livelihood.

3. Prepare alternate offers. Looking at your editorial calendar, you might want to create some options. Think of it as A/B testing for content: if the economy is good, we go with A, but if there’s bad news, we have B in our back pocket and we’ll run with that.

4. Sell, don’t buy. If someone approaches you to buy your website, it might be smart to resist the temptation to hold out for more. Nothing wrong with that, of course, but if your plans were to wait only another year or two to sell, well, that might not be an available option. If a recession comes, all business prices fall. On the other hand, if you have your eye on a competitor or complementary website, it might pay you to wait a year or two.

5. Get out of debt. Whatever else you do, get out of debt as much as you can. If you have to eat rice and beans to pay down debt, then eat rice and beans. Better now (when you have a choice) than later, when you have no choice. If business slows, you can cut expenses, but you can’t cut debt payments. Better to get rid of those as soon as possible.

If you have any assets you were planning to liquidate, now might be as good a time as you’ll get for the next 3-5 years if the recession comes. If you can hold out that long, no need to change any plans.

Be Ahead of the Crowd

Nobody knows for sure the economy will tank next year, so of course, this is speculative. The people who are spreading doom may be eating crow this time next year as the economy surprises them with its resilience. I have faith in the cycle, simply because it has moved to its own beat for many decades, regardless of who said what and even which man or party was in power. That means I’m not totally sold that we will have a recession so soon. The economic cycle is bigger than any individual or group, but that’s just my personal view.

However, even though I feel more positive about the economy than most, I am taking the warning seriously and passing on the hurricane warning. Forewarned is forearmed. There is no harm getting prepared. I am.

Get Prepared – Now!

This affects your business, and it might affect you personally. It pays to stay on top of the economy, and I’d like to help you do it (for free).

Which is why I’ve got a short email course that I’d like to share with you. In 6 easy lessons…

  • You’ll understand how the economy works
  • You’ll also understand the four distinct phases of each individual cycle
  • Most important, you’ll know what to do, and not do, in each phase
  • And you’ll get a free quarterly update, showing you where the economy is today, in plain English, so you don’t have to wonder where to get that information.

It’s completely FREE (I don’t have anything to sell you, no matter how much you might want to buy), and all you have to do is sign up right here.

About William Cowie

William watches the slow-moving economy for fast-moving businesses through his Four Season Strategy website.

22 thoughts on “Economic Depression: Is Your Business Ready for the 2013 Recession?

  1. It easy to believe that the time will ready to be good

    While it is easy to believe that times will always be good and your business is immune from any issues affecting the economy, the business with a plan will be the one that survives when those inevitable hard times occur.

    .

  2. You’re right, Natalie – it’s the easiest thing in the world to believe times will only get better. And, let’s be honest, most of the time they do get better. But we have to be prepared when we see signs of a storm gathering. It may pass, but the cost of getting caught is too high.

  3. Hi William,
    As always, very sound advice, especially liquidating un-needed assets that you might have been considering on selling. People are actively using the auction marketplace to purchase assets as it is a great place to possibly find bargains. Also, if you are on the selling side and it is time to move an asset, it also gives you a large audience of consumers, and therefore could net a seller a bigger profit. That can be done either online or locally as there are some fantastic local auction companies that do a great job selling assets.
    Getting out of debt is a must (which you speak of) no matter what the economy. One should always be thinking ahead in all aspects of life and try their best to be prepared.

  4. These are great strategies, William, for positioning ourselves to get through the next, or any, recession. Paying down debt is so foundational to success and is my personal favorite on the list. Not only does it create more freedom of choice because you don’t have to worry about debt payments, your financial peace of mind allows for a more productive life overall.

  5. Thanks, Kim. I could have added that it’s also good wisdom to build up an opportunity fund. You never know what unexpected opportunities the next recession might bring. And if the recession takes its time in coming, who know what other opportunities may present themselves to you?

    Cash is king, as they say.

  6. Thanks for this, William. It’s given me a few things to think about, though I’m fortunate in that I already have 2 businesses, one that makes more in recession and one that tends to make more in boom times.

    I really appreciate you sharing this information with me and everyone else here!

  7. That’s awesome, Sophie! It might be helpful if you could share with us how those two businesses line up to give us all some ideas of how to position two complementing lines of business.

  8. I like the article as it points at a very important question. The readiness. Will we have a recession in 2013? Maybe we should ask those folks that thought the free market is bulletproof. What I’m saying is that nobody knows and we should not attempt to answer the question. Be alert and be ready to shape your business as required and there will be no (big) surprises.

  9. William,

    Another terrific post, chock full of useful info. I’ve been thinking about my blog’s product mix, and will rethink it with your advice in mind. Thank you!

    Deonne

  10. Thanks, Deonne – you already have a head start with no debt. Always step number one. Let us know when you figured out ways to have “contrarian” product offerings. I believe that could help everyone.

  11. Hi William,
    When I signed up to your e-mail course – only a few months ago- you said ( if I remember rightly) that the USA was in late spring – early summer of the cycle- can it really go down hill that fast – or were the figures wrong??

    Katie.

  12. Ahhh… Katie, excellent question!! That is EXACTLY what the brouhaha at the moment is all about! Why are these supposedly learned people predicting premature doom?

    There are three reasons, and all three are unusual and big enough to make a difference:

    1. Europe. Europe is our biggest trading partner (and incidentally the biggest buyer of our debt). They’re in a mess because, other than Germany and Holland, the entire continent is not getting past their spring. In fact, France, Spain, Italy and Greece are stuck in the dead of their winters, for varying reasons. The mess is so big, there is even talk that the Euro zone as we know it will undergo significant change, with Greece and possibly other countries leaving. Nobody knows for sure, because this is all uncharted waters.

    So the fear here is that the disease, like a flu virus, will spread to the USA.

    2. China. They are having their own struggles. In order to head off a severe inflationary burst, they put on the brakes in their economy. One of the consequences is their imports have dropped significantly. In Australia, the mining industry was flourishing because of Chinese buying. Not any more. BHP, one of the largest mining companies in the world, had a 35% sales drop this year because of this. Other countries are feeling the same pinch, and the fear is this could hurt us.

    3. USA. Over here, the big fear is what they call the Fiscal Cliff. That is a combination of laws on autopilot which, if unchecked, will raise taxes and cut spending automatically. Combined, those taxes and cuts could chop 4% off the DGP, which will be luck to grow by 2% this year. Instant recession.

    The key in all of this is the word fear. None of the three big fears have actually happened (yet). But think of yourself: when you feel uncertain about your financial future, what do you do? You pull in your horns and hunker down. Save, don’t spend. “We’re not going out for dinner tonight, dear, we need to save our pennies.”

    Restaurants get fewer patrons, they buy less food and fire staff, and the next thing you know, you have a full scale recession. Why? Because people became afraid. You still have your job and make the same amount of money. You just stopped going out for dinner because you were worried.

    The upcoming election (not only of the presidency but half the seats in Congress too) is not providing consumers/voters with any believable answers about our future. In response, the fear is that the fear factor will push the country into what will essentially be a premature recession.

    That is what we prepare for.

    Me, I don’t believe it will happen. I believe the USA is strong enough in too many areas, and whatever could be cut is still cut from the last time, so there’s not a lot more to cut. And I just fundamentally believe in the economic cycle, which has survived all manner of politicians, good and bad. I’m in the minority, I know, but I have usually been right about this one. But there’s always a first time…

    So, in the end, it’s better to be prepared than to hope I’m right.

    Thanks for the question! 🙂

    • Hi Guys,

      The comment about “fear”, is what I belive have, and will, cause all our problems.

      The media, and us just gassing, fuel the fire..

      A few people go to dinner less often, some staff become unemployed. They buy less goods and services, and the Retailes have to let staff go…… and so the downward cycle goes on. All of the gloom is as a result of the negative views presented in the media. What do you think will happen if the Media was posative — go out and have dinner 3 nights a week. More people will be employed, the retailers will sell more goods, the manufacurers will produce more … and so on.

      Economics – as we used to now it, does not really exist any longer. It is all about “perception” and “fear”. The perception part is mainly from the BIG players in the economy (including Countries). The fear is mainly from the man in the street.

      How do we convince the media to project a positive outlook? Not possible. Only bad news sells newspapers.

      Have fun.

      Carel

      • Actually, Carel, you’d be surprised how often the media spouts positive. When the prices of houses and investments rise, the media is full of reports of how well things are going. The mistake too many people make is believing it. “Hey Susan, did you hear? Our price just went up $20,000 in value this year! Let’s go celebrate!” And off they go on that Alaskan cruise, which they charge, just because they feel rich.

        It’s important to note that nothing goes only down. The very nature of the cycle is that things go up, followed by down, followed by up, and… you get the picture.

        What we need to do financially is use the up (good) times to build up our reserves and get rid of debt. Then, when things go down (as they always do afterward) we use that money to score all the bargains we want. Then, when the next up cycle comes around, it’s rinse and repeat.

        Those who run a business just need to be aware that the needs, demands, mindsets, values and “hooks” change, depending on whether the economy is in an up phase or a down phase. If we’re smart, we can make money coming and going.

        • “What we need to do financially is use the up (good) times to build up our reserves and get rid of debt. Then, when things go down (as they always do afterward) we use that money to score all the bargains we want. Then, when the next up cycle comes around, it’s rinse and repeat. ”

          I love this way of viewing things 🙂 F***ing well said.

  13. Thanks for shaaaring how preparation maters today in business and life. My guy Bill and I have already got the emergency dry food and 50 galllons of water. Water is becoming scarce too.

    I’m a most positive person, and while I stay inspired because my book coaching clients keep increasing, my books keep selling and my wesite traffic keeps growing. That’s beause I market and prmote evdfy day–mostly with books and blog posts.

    Replace cash with gold or silver.

    Invest in physical gold and silver! It’s a hedge vs the dollar tanking, and it will soon. Find a local reputable coin dealer and go from there and research more with world economists and gold sites. Our news is pathetic in major US shows.

    Does anyone here know of good resource to sell a site that gets great targeted traffic? I’m interested.

  14. William! Fantastic post man, I’ve no doubt it’ll get people thinking and generate lots of discussion 🙂

    “Future predictions” are funny, sensitive things, and good for you for tackling the topic.

    A couple questions:
    1. There are companies that have always thrived overall, recessions are not, did all of them “prepare” or did some of them “not prepare” and still shine?

    2. Is this any different than the ‘panic’ over the year 2000 “millennium” bug that was supposed to bring our computer-driven society to a halt? How about the 2012 apocalypse-scare?

    Both of these events used Crowdsourcing (many people of all intelligences involved), and loads of data/pattern recognition to “predict” a bleak future, which sent many into “preparation” mode. A preparation that was ultimately unnecessary.

    Just some more discussion starters, I’ve got no dog in the fight 🙂

  15. Jason,

    1. There are those that survived recessions, and those that thrived. Obviously I don’t have a list of exactly which one falls in which category, but in general I’d say the ones that truly prospered are the ones that prepared.

    2. Yes, there is a difference. Recessions come again and again, and are an inherent part of our economic landscape. Those other things tend to be scares, like you said, rather than disasters. And it’s still impossible to say whether 2013 will bring a recession or not.

    This, however, is true. You WILL have a recession in your future at some point in the future. And if you’re young, you’ll have several. That is beyond dispute and if you look at the chart you will agree.

    If you’re prepared for one, you’re pretty close to being prepared for them all. If you have no debt and stay out of debt, well, you get the picture.

    So the key is to get your preparation done and then subscribe to my blog to get advance warning of the various phases of the economic cycle as it unfolds…

    • Re: #1 – might be worth studying, results may be surprising, perhaps flexibility, improvisation, and ability NOT to worry about the future (‘prepare’) is More Essential or More Common? 🙂

      Re: #2 – It could be a matter of scale and perspectives. “Disasters” come again and again as well (Haiti, Katrina, the dinosaur-wipe-out lol).

      One more issue of note:

      Tons of people have debt right now, but they aren’t dying or dead or anything. They aren’t crippled, or less-than-human. They aren’t less valuable, or anything. They might feel stressed and hypocritical and like a failure; they might be looked down upon and judged, I guess.

      In fact, they seem to be ushering in economic and societal change, rather than doing any real harm, from what I can tell.

      Either way, again, GREAT article, soooo much food for thought. Definitely got me thinking in some new ways. Thanks man 🙂

  16. I’m not sure about this “get out of debt”
    Of course it’s good for cashflow
    but with high inflation, investing with debt leveragein good assets is a good way to protect your wealth from inflation.
    it would be too long to explain, but debt is not always bad, it can be good forsmat investements
    my 2 cents

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