Winning the Recession

Introduction: How Recessions Affect Small Businesses

Winning the Recession is a new series of short articles to help small businesses not only survive but profit during this recession.

A recession is defined as an economic downturn where there are two consecutive negative-growth quarters. Frequently the economy experiences higher unemployment, reduced manufacturing, and consumers spend less.

This recession is primarily caused by the government’s reaction to the Coronavirus pandemic. The lockdowns caused immediate damage to the economy, and the subsequent “free” money caused artificial excess demand. That demand and workers being slow to return to work caused supply chain issues. The supply chain issues, both product and labor, contributed to high inflation.

Now the consensus is that we are entering a recession. However, this is not the same as recent recessions according to Dr. David Phelps.

“We’ve had 40 years, from 1980 to 2020, where we’ve had disinflation and low-interest rates, but then we turn the corner to face completely new rules. We have rapidly growing inflation now, and as a result, higher interest rates. This means we have to learn how to do things differently.” Dr. David Phelps, Inflation: The Silent Retirement Killer

This all means to win during this recession you must adopt new strategies. If not, the cost of doing business will eat into your profit margin.

A U.S. Chamber of Commerce’s 4th Quarter 2021 Small Business Index survey claims 71% of business owners report that rising prices have negatively impacted their bottom line. Additionally, the Consumer Price Index rose 8.5% for the 12 months ending in March 2022; the highest 12-month increase since 1981.

To make matters worse, small businesses are frequently hit hardest by a recession due to a lack of readiness.

If you want to win the recession, however, you must take actionable steps now.

Follow me for recession-winning tips and tricks to follow in future articles.