By: Phil Drinkwater Business Coaching- https://phildrinkwater.coach

It’s a commonly held belief that recessions – whether financial or in thic case due to the recent covid 19 crisis – are bad times to start or grow a business.

That’s not necessarily true, and it can be particularly untrue for a smaller business that’s agile and can shift direction quickly, even if just temporarily to gather some capital.

How recessions create business opportunities

In 2009, during the last major recession, discount groceries retailer Aldi saw it’s business grow by 25%. They managed to turn the middle to upper class – a potential customer group at the time – into new customers who would shop with them.

A shift in customer behaviour had to happen for this to occur. In this case, this group decided they should become more frugal. Their business growth was based on a new demand that they were able to supply – cheaper groceries. No doubt some of the new customers never returned to their old supermarket.

The key to all of this is a change in buying preferences. There may be less money being spent on a global scale, but money is being spent. It’s just being spent in different types of businesses to before.

Larger vs. smaller businesses during a pandemic

Aldi were lucky. They already had the business model needed. What if it was one of the huge supermarkets who were at the more expensive end? Setting up a new range of goods which they’re able to sell to a market wishing for cheaper products will take time, and they’d have to change some of the marketing strategies too.

But, as mentioned earlier, there are differences in the ways that larger and smaller businesses might survive.

What we can see is that while larger businesses might have access to more capital to weather a temporary storm, it’s tough to quickly change the direction of a huge corporation to service an entirely new market and convert enough of your new target audience into paying customers speedily enough to support the wages of a huge workforce.

Since a small business might only have two to ten staff, their ability to shift quickly enough to support the jobs is more readily within reach, and a marketer with a new target in mind can work wonders in creating a new arm of a business within a very small amount of time. You can almost start a business in a single day.

Unexpectedly then, a small business owner is in a particularly strong position during these times, if they’re willing to be flexible.

So what does this mean during the covid 19 pandemic?

The Covid pandemic is something of an “artificial” recession. Customers have temporarily changed their buying habits for reasons other than the usual reduction in confidence within the global economy. They expect everything to return “to normal”, whatever that ends up being.

Looking around at businesses of different sizes, it’s clear that a change in buying behaviour has happened. In the UK, if you tried to buy yeast and flour in the first lockdown, you’d be paying significantly more than the usual price because significant numbers decided they wanted to bake bread at home as a way to keep themselves occupied, and most of the yeast and four was packaged for enormous bakeries. It wasn’t that there wasn’t enough of the raw ingredient, but there wasn’t enough small packaging.

On the negative side of impact, the travel industry was significantly negatively impacted when countries closed their borders. They saw their businesses almost destroyed overnight.

As a general rule in business, as much as possible, you should aim not to see your companies output and processes as anything as emotional as “your baby” because when there’s a shift in buyers, you can find yourself in a never ending unsuccessfully cycle of attempting to pull the entire world towards your business model again. This can lead to a one-way ticket to frustration.

Instead, it’s important to recognise that a business is primarily about making money. Yes, you created a business, and that can be used to create other businesses when needed. When you switch to this mindset, opportunities present themselves in times like these.

So what options exist for business owners wishing to capitalise on the downturn in the global economy as a result of the pandemic?

Being in the right place at the right time

Sometimes, you’re just lucky. It’s clear that businesses such as Zoom will have had their fortunes completely changed as remote work became a necessity.

Some employers will shift towards remote working permanently too. Twitter is just one company that has chosen to allow employees to work from home on an ongoing basis. This shift will no doubt cause a reduction in the demand for commercial property, who may need to look for new options based on their strengths.

But if you’re not fortunate, how can you capitalise on the changes?

A new business, or a diversion?

A temporary change of business model, or something more permanent?

If you need to divert or redirect your business to keep yourself from closing down, you may be able to return to your original focus later, potentially with more capital for investing in your old model.

Or you can keep both businesses running. Or you may even prefer the new one!

How have businesses responded?

During the first few months of the pandemic, entrepreneurs looking for new business ideas started buying up stocks of yeast from supermarkets and selling them at huge profits on Amazon. Others decided to sell PPE and one I spoke to said he’d gained tens of thousands of pounds in revenue as his old business folded.

Others took advantage of new content marketing skills they’d learned free on YouTube and sold their own courses, pre-made marketing calendars and hastily produced SAAS software utilising ads on Facebook and other social media sites.

For a new startup, a quick-to-build social media presence boosted by an influencer or two, plus some ads, can result in online orders flooding in as people look for new products that are cheaper or are ways to increase their own skill base and keep their mind active during lockdown.

More established businesses offer courses for free too, in return for subscriptions to email lists. It’s likely they gained long term subscribers from this.

Where can you make money from?

As a business owner, if you can’t make money “here” in the global pandemic, make it “there” instead. That’s an entrepreneur mindset. Put another way, swim with the tide, not against it.

The travel industry has been – in the UK at least – been slow to respond to the coronavirus crisis though, with many companies not taking the opportunity to create many holidays for customers within their own country, preferring instead to lobby the government to open up.

There was business available, and the governments have been more interested in keeping people alive, so to some extent they were swimming against the tide.

Other businesses have done well from the staycation focused public though; for example, it has become difficult to hire landscape gardeners. Garden furniture has also been tough to source as existing manufacturers struggled to keep up with increased demand. There was a significant opportunity for companies with manufacturing capabilities to temporarily direct their businesses towards this.

A new or updated business model?

You may find that you don’t need to completely change your business activity, but you may benefit from changing the way your current business operates – possibly with a new financial model or sales model.

This may come about from new customers entering a market and the existing model not suiting their needs. For example, there has been a significant uptick in the number of customers buying from a variety of types of online business for obvious reasons.

I’ve been aware of more small online businesses that sell non-physical products offering money-back guarantees in order to encourage new audiences. This was always popular, but today nearly every online business of this type needs to offer this. The increased competition has resulted in a somewhat saturated market and those desperate for customers have been willing to do anything, forcing more established businesses to offer the same.

For larger businesses, change could involve looking at new partners within an industry, finding new income streams, diversifying the product line, establishing a new supply chain or changing the percentage of employees in different departments. Significant changes to your business should always be in line with market research that shows changed consumer behaviour though.

You may also need to adjust your marketing or increase your brand awareness within a new market to demonstrate your response to this behaviour. Depending on your activity, this might include something as simple as tweaking facebook ads or google ads, or as broad as an entire new national or international marketing strategy to support an entirely new business goal and brand.

Supermarket delivery companies have been obvious winners here, and they hired significant numbers of temporary workers to facilitate the increase in this area of their business. We don’t yet know how much of this will continue long term.

An improved company?

During recessions, some businesses sadly do fail.

The name of the game in a pandemic, then, is “survival” because – in a post pandemic world with a recovered global economy – there will likely be fewer players in the marketplace, resulting in almost automatic business growth for you.

This is particularly true for SME businesses that don’t always have the deep pockets that larger businesses have in order to keep them afloat.

Those that manage to survive through a change in customer behaviour typically focus their attention on a positive customer experience by delivering significant value to their current customers and taking advantage of customer loyalty, which might be the only thing keeping your business alive. Of course, you should continue to warmly welcome new additions to your customer base too!

So, simply by staying in business and ensuring you offer more value than your competition, your business is likely to grow on the other side.

Taking advantage of opportunities

Business is primarily about taking advantage of opportunities that exist.

In “normal times” you might invent an entirely new market through a product that solves a problem, or you may spot a local demand which is not being serviced.

During this Covid 19 pandemic there have been monumental shifts in customer behaviours and sensible businesses have found a way to service those needs, realising that once we return to normal there will be a percentage of customers that don’t return to their old habits.

So, during a pandemic, business really isn’t any different than before; spot and opportunity and service it.

This pandemic has sadly affected livelihoods, but money is still circulating around the economies of the world and many financial analysts expect a significant return to pre-pandemic spending in 2021 and 2022. The businesses that have been boosted in 2020 and 2021 will be those who have spotted where the money has been diverted to, and shifted their business to take advantage.

They’ve decided to flow with the river, rather than swimming against the tide.

Can you find new opportunities?