More millionaires are made in recessions

It’s been doom and gloom for the last few weeks now. Both Federal and State Governments are implementing drastic measures to limit (as best they can) the pending destruction from coronavirus (Covid-19).

Mainstream media are whipping us up into a frenzy by reporting on Covid-19 deaths overseas and the increasing number of people testing positive in Australia.

As a result, mass hysteria has broken out among our citizens. If you don’t believe me, try buying toilet paper, pasta, rice, tinned tomatoes, eggs or meat.

Add to the mix the predicted recession and society is facing a critical juncture.

For the more than two million small businesses in Australia, the outbreak of Covid-19 and the pending recession it will bring is dire. It’s been mandated that all non-essential services have to shut up shop — that’s cafes, restaurants, bars, entertainment complexes, offices, tourism locations etc.

The list is vast and it would be foolish to think that it won’t have a lasting impact. This situation has made it clear that there are two small business owners functioning at this time.

Business owner 1: He makes comments like “It’s all over red rover” and “We’re stuffed”. For him, the chance to continue his small business seems futile and he’s prepared to shut the doors and forever blame the recession for failure.

Business owner 2: She looks at the environment and thinks “What opportunities are available to me” and “How can we continue to help our customers”. For her, the downturn is merely a chance to rethink how she’s operating and devise a plan to push it forward.

Which small business owner are you?

All business owners who go on to become multi-millionaires are option two. In fact, it’s common knowledge that during or soon after a recession there’s money on offer should you choose to be brave.

The list of successful businesses that have started during difficult periods and gone to build a lasting legacy is vast. IBM, General Motors, FedEx, Hyatt, Microsoft and Hewlett Package are just some examples of entrepreneurial foresight in tough times.

Even in the darkest of financial circumstances opportunity presents itself. More people became millionaires during The Great Depression than in any other time in American history.

After quitting school early, failing his military training and being fired from a few jobs, Harland David Sanders saw an opportunity to start a business during this time. In 1924, Sanders was the general manager of a service station in Nicholasville Kentucky that would close some six years later.

In 1930, he was given a lifeline by the Shell Oil Company to manage, rent free, another service station nearby. To make ends-meet during a difficult time for the country, Sanders started selling his special fried chicken.

From the ashes of The Great Depression, Kentucky Fried Chicken (or KFC) was born.

I’m not suggesting we should bring on a recession simply so some can prosper while many others fail.

But for me, there’s opportunity in a difficult situation if you’re prepared to look (and work) for it. If you have the mindset to fail, it will happen. Conversely, you have the mindset to achieve you will.

How to identify opportunities in a tough market

To identify a new opportunity during the Covid-19 emergency or things like a recession, you need to look, listen, learn and be nimble.

Look at what you offer: Until this point, your service offering has stacked-up and has built a health business. Now, the dynamic has changed and to remain wanted you must review all aspects of what you give to customers to understand if that’s what they need right now (they’re facing the tough time too).

Listen to your customers: You haven’t been successful without listening to them, but the conversation will be different with a drastic change in circumstance. What’s the biggest pain point they now face? Ask your customers how they think you can solve it for them. Make sure you tap into their knowledge of your industry and get as much feedback as you can. If one customer is going through something, it’s likely others are too.

Learn about the changing face of your industry: Education in business is paramount to success and it’s no different when times are tough. Commit to learning as much as you can about your industry and how it’s evolving due to something like Covid-19 or a recession. Being able to offer your customers ideas and techniques backed-up by evidence is a difference that will set you apart.

Be nimble and act quickly: Opportunities to be the first to do something new in business don’t come around too often. Make sure you have the systems and processes in place to execute a change in business direction efficiently. If you can’t physically accommodate it internally, you can’t offer it externally.

Case study: An events company moves online

When the news broke, a client of mine called in a panic. As an events company with a function space booked out months in advance, the Government directive of not allowing more than 500 people in a space together was not good for this business.

While my client fully understood the need to do this, the prospect of losing out on months of business was a bitter pill to swallow. Their questions to me were wide-ranging:

• How can we pay our staff?
• How do we reimburse our customers with money that’s already been spent on their event?
• How can we survive six months not being able to run events?

I told them to rethink the game and come up with a solution for their customers, not focus on themselves.

After a few planning sessions addressing the questions I mentioned earlier, this events company had identified their opportunity. Going forward for the next six months, this events company is going to run online events — like summits and conferences.

Once the change in strategy was agreed, it was communicated to their current customers who overwhelmingly accepted it, appreciated the thought and effort and understood the need to realign their planned event to accommodate a massive change in situation.

In fact, changing to an online event portal for the foreseeable future has reduced internal costs. Going further, my client is now targeting businesses who had an in-person event cancelled due to Covid-19 and pitched their online events strategy. It’s already resulted in new work for my client.

Like Colonel Sanders, my client was able to identify an opportunity to prosper in a tough market.

Opportunities don’t stop simply because the situation goes from good to bad to terrible.

If you have a willingness to be brave and can block out the negativity (like mainstream media) and instead look to how you can help by listening to your customers about what they truly need in this time, you stand a strong chance of not just surviving up flourishing.

Remember, if you’re the thought leader in making things work no matter the situation, people will flock to you sooner rather than later.