Thread by @FinPlanKaluAja1

“Profiting in a economic downturn ”

In a receding economy, what happens?

1. Incomes fall;households spend less
2. Business invest less; as household spending fall, business
spend less on expansion, rent, diesel, even paper

A downturn is like an economy going on a severe diet.

On the face of it, this is a problem. If you are an entrepreneur you will see sales falling as less households have disposable funds to buy goods, but this is also an opportunity.

How?

In a downturn, the business environment becomes open to new ideas to save costs & improve productivity.

As business fail (sadly), excess capacity becomes available, eg, offices rent is more available & cheaper.
Start-ups can hire experienced workers who have lost their jobs.

To profit from a downturn, there are any ways, Let’s start this with;

A. Start a Business on an Existing Model:

A recession is a great time to start a business. Yes, it sounds counter intuitive but many great businesses were established during a recession e.g. Microsoft.

Pick a business model that prospered during the boom years, replicate that model but offer your service at a lower price, same quality.

E.g. look at WhatsApp, they offered free calls. Who does not want free calls? what’s the model they disrupted? Traditional GSM calls.

Remember consumer taste are hard to change, they tend to remain the same even during a downturn, but consumers have less spending power so they are forced to cut back. So offering a proven product or service that offers same utility but at a lower cost is a winning strategy.

Cowbell offere milk in condensed form in small sachets, saving packaging costs, making milk “cheaper”. Cowbell Milk did a lot of direct sales, also saving distribution cost.

Same utility (milk), different models, lower prices for Cowbell brand, cowbell gained market share.

Think out of the box...

Think Global.. Act Local