Hard Truths about Recession (and Why You Shouldn’t Worry)

Recession! It’s on everyone’s lips, in every newspaper, and on every YouTube channel. It sounds like a done deal, doesn’t it?

No wonder everybody’s running for the hills, canceling all their subscriptions and wondering where to hide their small business so it wouldn’t be trampled by the big bad recession.

Recessions are scary, they’re unpredictable, and they have the potential to destroy businesses and ruin livelihoods. But despite all of that, there are some hard truths about recessions that we need to face.

And once we do, we can see that there’s no reason to panic. In fact, recessions present opportunities for small businesses and entrepreneurs to thrive.

Here’s what you need to know.

1. Recessions don’t last forever.

This may seem obvious, but it’s worth repeating: recessions don’t last forever. They may feel interminable when you’re in the thick of them, but eventually, they will end. The key is to weather the storm and come out on the other side stronger than ever before.

Recessions last an average of 11 months, according to Lindsey Bell, chief markets and money strategist for Ally. The shortest recession on record happened in 2020 during the pandemic: 3 months of panic and it was done.

2. Recessions present opportunities.

While it may not seem like it at first, recessions do present a unique opportunity for small businesses and entrepreneurs to get ahead.

When big businesses start cutting costs, they often turn to small businesses as a way to save money. This can lead to increased market share and profits for small businesses that can adapt and pivot quickly.

Every recession is unique. Remember when covid hit and everybody thought it was over? And then lonely and isolated people started to order massive amounts of everything online and some smart online businesses tripled their income?

Why wouldn’t that be you this time around? All you need to do is keep your eyes open for the new profitable thing.

3. You can’t control the stock market and you shouldn’t try.

There will always be things beyond your control, like the weather, the stock market or your craving for chocolate. Don’t even try! The best you can do is stay flexible and roll with the punches.

During a recession, the stock market drops and so do your savings. But it also gets back up.

The average duration of a bear market since 1950 is roughly 418 days, according to Anthony Saglimbene, global markets strategist for Ameriprise Financial. (The Washington Post)

Put your patience hat on and just wait it out. You’ve got 418 days, don’t you?

4. Recessions can be good for businesses.

Don’t believe everything you hear about how bad recessions are for businesses. While it’s true that some businesses do struggle during economic downturns, others thrive.

For example, companies that provide essential goods or services often see an uptick in demand during a recession as people cut back on discretionary spending and focus on necessities.

So, if you’re selling tomatoes, good. If you’re selling land on the Moon, bad.

Businesses that can streamline their operations and become more efficient often find that they come out ahead of their competitors who haven’t been forced to make these changes.

So, instead of being afraid of a recession, use it as an opportunity to make your business better prepared for whatever comes next.

5. Recessions help to weed out inefficient businesses.

In any market, there will always be some businesses that are more efficient than others. During a recession, the less efficient businesses tend to struggle while the more efficient ones survive.

If this sounds scary to you, it shouldn’t. It’s actually a good thing, as it ensures that only the best companies can thrive in the long term. And who knows, maybe it’s your competition that’s not proficient enough to make it.

Conclusion:

Panicking about a recession is natural — but it’s also unnecessary. Yes, recessions are scary and unpredictable — but they don’t last forever.

They present opportunities for those who are willing to seize them, and everyone is affected by them sooner or later (regardless of how much preparation they did).

So instead of worrying about things you can’t control, focus on what you can do to weather the storm and come out on the other side even stronger than before.

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