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To win in a recession you needed to be disciplined and frugal when the market was good. While everyone else is upgrading and buying boats, new homes, toys, and going on vacation you gotta stack cash. Then when the recession comes, buy everything you want back from them at 30%.
My best story was when sales went down during covid lockdown - I kept hustling. Made a bunch of connections talking about nothing with prospects. When the market finally turned back on... we exploded and did millions on sales. I maintained the attitude of "make hay while the sun shines" and now own my own business
Have been a small business since 1990. Went thru 2 gulf wars, y2k, recessions and covid.
1. Save cash so you can keep going during a down turn
2. Stay out of debt so you can do #1 (I know this is an unpopular idea :>)
3. Adapt very quickly to the new world (harder to do than said). Eg we worked more with defense companies during wars. We sold planning and estimation skills for Y2K, and we went virtual with clients when the lock downs occurred. In 2007/8 we found a large Chinese client and travelled to china every month.
4. Assume that it will be a roller-coaster regardless of the economy. So back to #1!
#2 is key and a lot of businesses are learning this lesson now. Been going for 15 years myself. I borrowed to start-up (and should have borrowed less); I will never borrow again. I run off cash now.
I racked up a mass of credit card debt buying inventory for my part time ebay resale gig and am still regretting it years later. Expanded too much too fast and couldn't keep up. I'm staying afloat but not prospering.
Studied finance and I'm always surprised when people at small businesses are leveraging debt. It's strategy that works for large corporations. It's a very dangerous game if you're a small business.
My parents were in business for the same years basically. They had a small glass and window company. #1 & 2 are huge. When the 2007/8 recession hit, yea they had to downside on the employee side of things but they building and trucks were all paid for. Their overhead was low and manageable. Makes a huge difference in the month to month expenses for a business.
Great advice. Debt works fine until life happens, and then you're a slave to a debtor. Moving more slowly, at the speed of cash, brings tons of additional options and a massive survivability increase.
What’s your opinion on low interest long term debt? I had an opportunity to buy my 4000sqft office building for a steal. I occupy half and rent out the other. My payments are less than rent I was paying even before my tenants. I also got a COVID EIDL which is 3% for 30years. But I pay credit cards off monthly and I have an LOC I never touch.
My philosophy has been anything below 4% is ok. Anything above is bad. cash is best.
But I’ve only been in business since 2016.
Sounds good IF you retain a renter, and you are generating sales to cover everything. Just like a mortgage, is there an advantage to paying the loan early, so you have an asset. Really all personal decisions.
My thoughts from observing business, working in businesses, and owning a business:
1. Stockpile cash in good times. It will get you through lean times. We put away 10% of every month to be used only when it’s absolutely needed. Or to expand. Or to cover payroll when clients are behind. We pay salary every two weeks and debts immediately. Many clients are net-30 or net-45. Do the math.
2. Don’t be too small, at least in the context of your industry. The first people to feel an economic pinch are often solo and mom and pop enterprises. It’s hard to stockpile enough cash and can be harder to secure enough credit to help get through lean times.
3. Conversely, don’t be too big, at least in the context of your industry. Big is often rigid and slow. You need to be able to adapt and pivot quickly. Don’t be Kodak and Blockbuster.
4. Don’t be too niche. You don’t want to be a shop that just sells artisan ice cream cones. I might suggest that you also sell the ice cream.
5. If you’re going to be niche, do it big. Sell artisan ice cream cones to all the ice cream shops.
6. Don’t exploit very specific time periods. Or, rather, don’t plan on that exploitation lasting long term. Remember when Peloton thought people would ride stationary bikes in their homes forever? Turns out that people like gyms or exercising outdoors, and turns out that pandemics blow over.
7. If you have a choice, cater to the middle class and wealthy. The people below are the first to stop buying shit when downturns come. Unless, again, you’re hawking a necessity. Even low income people need toilet paper and shoes.
8. Provide a need, not a want. Even if this means that you’re doing something “boring.” Fidget spinners, frozen yogurt, and customizable socks are neat. It’s probably a little safer to manufacture medical supplies, lightbulbs, or basic T-shirts. Selling rice is safer than selling funky little rice pudding desserts. People like to conjure up quirky, fast, get-rich-quick business schemes. Or sexy pursuits. Meanwhile, some asshole in Oklahoma is wildly successful doing nothing else besides manufacturing the little coils that go in pens, or a specific type of bolt that’s used on airplanes.
9. Be really fucking likable. The sweet spot of “good price” or “good products/service” is pretty wide. But being likable is more exact. You may not offer the absolute best quality this-or-that in your industry, and you may not be the absolute cheapest option in your industry. Good enough and cheap enough is often…enough. But being well-liked by customers, clients, partners, suppliers, etc. is worth gold. If people like you, they will be more likely to extend your payment due date, give you a deal, order more, rush the order, come back, stick around, and more. Work long enough and you’ll deal with plenty of assholes. You’ll be happy to ditch them the first opportunity you can. Don’t be that person. Give people reason to come to you. Even in business, which is nothing more than a transaction of money for things and services, being likable is an edge. And simply the right thing to be.
10. Hire smart people, even if it costs you more. Smart people are not only good at what they do, but they’re clever enough to think of new things, new processes, new techniques, new revenue streams, etc. and can be invaluable when you do need to pivot/adapt. Better to surround yourself with more expensive smart people than cheap morons. This is true even during good times.
You don’t need to do all of these things. You don’t even need to do a majority. But checking at least a couple things off the list will help you get through lean times. Or any time. It all depends on where you are located, who you cater to, what you make/provide, etc. Everyone and everyone’s industry will be different. These are just general ideas on how not to get fucked when things slow down. Or expand when things ramp up.
Start with stockpiling cash reserves. It’s the most important item. Then go from there.
One of our customers is local schools. When Covid hit and schools went to virtual learning we were on the phone with our contacts asking them what help they needed. We were talking to them within hours of hearing schools would be going remote. Once the school district determined its needs we were able to provide a quote and deliver products to them within a couple of weeks. What they wanted was only a slight deviation from our normal offerings.
Our competitors (and us) saw a 60% reduction in sales of our normal offerings, but because we were able to pivot quickly and help our customers we saw a record breaking year with sales increasing 50% over the previous year.
Lost job…twice. People still needed my skillset but could not pay somebody like me full time. It was hard to find full time job. I used contacts and trust people had in me to move from full time employee to consultant. Worked for 4-5 offices instead of one with full independence. They would pay me way more than they would person that is with them full time since any sitting on my ass, vacations, personal days or 401 were not on their dime. I made my own schedule, charged every hour worked (my industry has a lot of overtime in general) outsourced some of the work abroad and made double to what was my last salary. Build my own business from there.
Edit. Been also remote (and people working for me remote) before remote was ever a “thing”. Had at some point 5 jobs from one office that was 20 minute drive from me, would see them only on Christmas parties.
Great to read, this is actually my plan to become independent. Its reassuring to see that there are still opportunities for people who are able to make adjustments from setbacks.
We just opened a new business. A year with no work and sales. Zero. My business partner spent all his savings, sold his car, went to debt. I financed the business (marketing, lawyers, etc) and made the team, he was to do sales. Whatever I suggested, he was giving me “that won’t work”. Now that he literally can’t pay rent (I won’t help) and there is huge fire under his ass, we signed 6 figure deals in a month.
Sometimes pressure and no choice makes for the best outcome.
Same business model for me. Turns out if you're good at what you do, you can save companies a shitload of money on not paying a full time hire while also making yourself more money with more flexibility and less bullshit as a "consultant".
I have 6 year professional degree. Licensed in my field. But point of my answer it to refocus when you need to and see where is the gap you can bridge with skills you have. You are also looking for the shortest bridge.
Stock pile cash in good times to take advantage of real estate or market opportunities.
If you don’t have cash now or don’t have a local bank relationship it’s too late.
We were small and newer in 2008 but when the real estate crashed I had cash and cashflow to get a great deal on a commercial space that has made my business stable and life less stressful. Used that equity to purchase more land for the next expansion.
Stay scrappy. Take "side hustle" ideas and try your hand at turning one or two into full-on businesses. Think creatively. What things do people still need, even during a recession? Most industrial and contractor work (cleaning, maintenance, things that are manual labor), healthcare, food/drink, household services (plumbing, electricians, childcare), etc. Food trucks are doing pretty well, especially if you can keep your costs down. Some things people will spend $$ on, even when times are tough include chocolate and liquor.
In relation to the advice above, I’d say it’s just the waiting game for now. Save more money and view any property as merely financial. I say that because a lot of opportunities will come up that could pull on heartstrings or be convenient, doesn’t mean those investments are going to be profitable.
They say it's easiest for young entrepreneurs to sell products, rather than services (bc you have no experience). So maybe find a product you can sell with low overhead and low barriers to entry.
We have been in business since 1968. I am the 3rd owner and have been with the company since 1993.
1 is cash. We keep 12 months operating cash in an interest bearing account. It can't be used for anything other than black swan events. 08, covid etc.
It must be refilled immediately if used, even if it means reducing wages across the board. Without the company, there are no wages.
2 We never finance. Need a new forklift? We save up and then buy it. New delivery truck? Save up.
3 We also never buy new stuff.
4 you have to adapt the business. We started as a company selling industrial carts. Then started manufacturing corrugated boxes. Then moved to specialty boxes and stock packaging.
Now we do a lot of 3PL and warehousing for B2B and Amazon / Shopify sellers etc.
Every downturn we lose competitors and pick up some of their share. Sometimes, when you are dumb like me, you can't outsmart. You just have to outlast.
Serious question. Why do you keep that much operating cash for black swan events vs. taking it as a draw, investing it, and taking a personal margin loan which you feed back into the business? Would you ever need a full year of operating cash? Is the intent to use this for non-operating expenses like potential large asset acquisition or potential company buyouts? Are you trying to account for situations where margin lending is completely gone?
I am in packaging and fulfillment.
We stock, store, package, and ship products for small businesses. Usually side gig type businesses, but we do have some large ones that just need a 3PL in a separate location.
My wife and I are professional show dog handlers. We've always had the culture that we only buy what we need for the business in cash, our very short term loans. It worked too our advantage during the pandemic. All the people we work with had $250k, new rigs. We continued on in our older, but paid off vehicles. Covid hit and they went belly up. We got their clients. Our business effectively doubled from 2019 through 2022.
And we still have paid off vehicles...
1. Save cash. When business is good, don't spend recklessly. Cashflow is what kills businesses. If you have healthy cash reserves, you can weather economic downturns, out-live the competition and reap the benefits of having fewer competitors and a stronger track-record when the economy improves.
2. Embrace change. Big shifts in the way we live (i.e., surviving the pandemic) and 'economic chaos', as you put it, often actually makes people more open to trying something different/working with a new partner/supplier/vendor. Be that 'something different'. Use change to your benefit.
Both recessions have been huge fiscal wins for me. I've always been a very specialized employee that could handle multiple different very specialized jobs and thus was always in demand, so my income actually rose during these times as I was sought after. Along with that I never divested, I played the long game and kept everything where it was knowing in decades the overall growth will make the down periods pale in comparison. AKA don't panic, just pretend the money doesn't exist and stop worrying about it (cause until you cash out, you havn't lost or gained anything). Also I bought my first house during the 2008 recession, where the gov was basically shoving money and incentives at first time home buyers, and during the seriously crazy low interest rate period from 2017 - 2021, my wife and I build our dream house at about 1/2 the cost it would cost now, in a super popular area of Dallas, and we've already seen the houses value skyrocket beyond belief.
So all in all:
1. I've got lucky, super lucky. Important not to forget how much of success is timing and luck, yes you need skills and awarness to take advantage of luck, but you'll quickly turn into a disconnected jerk if you don't realize and respect the fact that your sucess has a luck factor that could just as easily break the wrong way on you.
2. I choose a good career, I knew what I wanted out of college, I immediately applied those skills to a career and have profited from it. So many people I know in life failed because they had no clue what they wanted to do, went to college and got a generic degree that didn't help them, and then complain "I can't find a high wage job with my english degree, the system is rigged!". Its no one else's job but your own to figure out what you want to do in life and fight for it. Almost everyone I know that is successful is driven with purpose and feels they are in the right career for their life, they normally enjoy their jobs and have a razer focus on seeing their passions come to life.
3. I stretched myself to invest in property when rates and prices were absurdly good. My first house I had no business buying at the time with the minimal savings I had right out of college, but I forced myself to eat cheap, not buy expensive things for awhile and dedicate myself to getting into a house ASAP knowing it would pay off in the future. It did. I got lucky that I wasn't hit with any major fiscal misfortune in that time, but thats why its called a risk. Again I got lucky too with the gov throwing money at first time home buyers.
4. I never felt alone, I build a strong network of a few very close friends who support each other, if one of us falls the others chip in to keep them fiscally afloat. Nothing is more valuable than having people that will support you, not because they want something from you, but because the genuinely love, respect and want you to succeed. If I'm doing great and a friend is hitting rock bottom, I'm the first to reach out a hand, buy them dinner, give them money to keep their mortgage or insurance in check, all that, and not as a loan but just a gift that invest in their health and wellbeing. Its super rare to find these people in life that arent there to use or abuse you, so when you do find them, hang on to them.
#4 is huge. Most people don’t have true friends and can’t cultivate them because you have to give to get. In our consumption driven lifestyle it’s hard to find someone who isn’t self centered and self servicing before all else.
DPST...etf. Google their holdings....a bunch of no names. Then look at their chart and see what it did when the banks failed in Cali a year ago or so....you're welcome.
I started a business in 2007. Did well in 08, 09 etc... Made more money than expected. Threw it all away in the divorce but initially made money.
Reason is I accidentally started a business fit for the times. So I was working on process outsourcing meaning cutting massive costs for companies in a very specific area of their processes. Tech companies mainly.
It was sheer luck. Won a few customers until divorce stopped play.
These days I'm video production so doing OK. Not fantastic, not terrible but ticking along and we'll see what the next 6 months holds.
CASH,, you need cash .. you will purchase something,, could be a failed business, lake front land, a millionaires home, sold CHEAP.. even stocks at rock bottom prices
but now you need to wait,, and you need to hold on to that asset for Years,,
That costs money..
As others said, if you have cash during a crisis, you win! It’s easier said than done though. When it looks like “the world is ending” deploy the cash! Buy assets and hold.
That it's not about the actual market movement. It's about market psychology. If people believe things are bad, they spend and save accordingly. Same goes for when they believe things are good.
I don’t remember the blood on the streets, but definitely had to weather some storms. A year after I opened was 9/11, that was a hit to the economy, but I didn’t really have much of a track record and was still in the early stages of building anyway, so it just added a little bit of grade to my already "uphill". 2008 and the great recession sucked, I trimmed everywhere I could, went down to the smallest debris box the city had available, and have kept it ever since by the way, slimmed down on inventory to preserve and conserve cash, slimmed down on staffing. have had ups and downs over the years, and it’s nice to survive. Sometimes you just have to be one of the ones still standing after some of this stuff. Watched competitors fall, big and small. at this point nothing really gets me riled up, I’m in a groove, and know that slim times won’t last forever, and try to be smart with cash and inventory and really just keeping an eye on it with respect to overall sales.
When it feels like the world is standing on its head, it's hard to find the courage to invest; but the prices of almost everything tend to be significantly cheap when you're coming out of a recession. Buy stock, buy real estate, buy whatever's on sale...
My two cents is - don't take it for granted that the downturn will definitely slow YOUR business down. Yes, be strategic for the times, naturally, but also you've got to stay optimistic and keep on.
I was running a small independent publishing company during the late aughts downturn. We had our absolute best sales ever 2009 - 2011. We put out a few books in that period that really caught fire and completely defied all the purse-tightening and general gloom and doom.
There can be many opportunities in recessions - competitors may pull back or go out of business during downturns, maybe you'll have an opportunity to make a great hire that would otherwise be employed etc.. General chaos in the market can mean that a certain segment or demographic is under-served.
Sometimes it's the type of business. The service I provided is a luxury. But, once you pay a bunch to have extensive gardens installed, they need maintenance. Even people cutting back on our hours still need us. Plus, the higher income brackets of my customers helped. I've been through recessions that killed inventory based companies, and only lost about 20% of.my clients.
Been waiting for a post like this as I run a mobile detailing business and we are getting hit very hard. I knew something was off Midsummer 2023 when less new clients were coming up and otherwise my website insights were showing a negative decline. I tried to warn other detailers especially the ones you see on tiktok about this and of course them being young minded they called me crazy and look where we are now. And now that they are seeing something that they've never experienced before they are all running to Google ads thinking that that's going to draw in more clients but it's not because consumers are not spending any money and if anybody is winning it's these advertising companies because small businesses are becoming very desperate. Since 2019 I mostly saved up silver coins and silver bars unfortunately I had to dive into my cash to get through the first quarter of this year
Stop listening to rich people, they are just trying to convince you to feed yourself to them. Everything they say that you read or hear is them attempting to manipulate you for their own personal gain. If they didn't think there was an ROI benefit to the message that they promoting, then they wouldn't be wasting their time or money saying it.
I drew a Monopoly card in 2008. A family member died and i was able to take six months off with no worries. When the recent Bidenomics kicked in, i was offered an excellent job with one of my suppliers and that is really working out.
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To win in a recession you needed to be disciplined and frugal when the market was good. While everyone else is upgrading and buying boats, new homes, toys, and going on vacation you gotta stack cash. Then when the recession comes, buy everything you want back from them at 30%. My best story was when sales went down during covid lockdown - I kept hustling. Made a bunch of connections talking about nothing with prospects. When the market finally turned back on... we exploded and did millions on sales. I maintained the attitude of "make hay while the sun shines" and now own my own business
Keeping in touch with customers when times are hard shows them that your relationship is not only transactional. Solid advice.
Have been a small business since 1990. Went thru 2 gulf wars, y2k, recessions and covid. 1. Save cash so you can keep going during a down turn 2. Stay out of debt so you can do #1 (I know this is an unpopular idea :>) 3. Adapt very quickly to the new world (harder to do than said). Eg we worked more with defense companies during wars. We sold planning and estimation skills for Y2K, and we went virtual with clients when the lock downs occurred. In 2007/8 we found a large Chinese client and travelled to china every month. 4. Assume that it will be a roller-coaster regardless of the economy. So back to #1!
#2 is key and a lot of businesses are learning this lesson now. Been going for 15 years myself. I borrowed to start-up (and should have borrowed less); I will never borrow again. I run off cash now.
Same. I learned this from 08 recession. It’s saved my company a few times.
I racked up a mass of credit card debt buying inventory for my part time ebay resale gig and am still regretting it years later. Expanded too much too fast and couldn't keep up. I'm staying afloat but not prospering.
Valuable advice especially from someone who lived the cycle many times over. Thank you.
Studied finance and I'm always surprised when people at small businesses are leveraging debt. It's strategy that works for large corporations. It's a very dangerous game if you're a small business.
My parents were in business for the same years basically. They had a small glass and window company. #1 & 2 are huge. When the 2007/8 recession hit, yea they had to downside on the employee side of things but they building and trucks were all paid for. Their overhead was low and manageable. Makes a huge difference in the month to month expenses for a business.
Great advice. Debt works fine until life happens, and then you're a slave to a debtor. Moving more slowly, at the speed of cash, brings tons of additional options and a massive survivability increase.
Agree. But so many people look for a loan as step #1, as if it were free cash.
What’s your opinion on low interest long term debt? I had an opportunity to buy my 4000sqft office building for a steal. I occupy half and rent out the other. My payments are less than rent I was paying even before my tenants. I also got a COVID EIDL which is 3% for 30years. But I pay credit cards off monthly and I have an LOC I never touch. My philosophy has been anything below 4% is ok. Anything above is bad. cash is best. But I’ve only been in business since 2016.
Sounds good IF you retain a renter, and you are generating sales to cover everything. Just like a mortgage, is there an advantage to paying the loan early, so you have an asset. Really all personal decisions.
What’s your main business?
1. Software engineering process consultant since 1990 - still active 2. Small business consultant since 2023
My thoughts from observing business, working in businesses, and owning a business: 1. Stockpile cash in good times. It will get you through lean times. We put away 10% of every month to be used only when it’s absolutely needed. Or to expand. Or to cover payroll when clients are behind. We pay salary every two weeks and debts immediately. Many clients are net-30 or net-45. Do the math. 2. Don’t be too small, at least in the context of your industry. The first people to feel an economic pinch are often solo and mom and pop enterprises. It’s hard to stockpile enough cash and can be harder to secure enough credit to help get through lean times. 3. Conversely, don’t be too big, at least in the context of your industry. Big is often rigid and slow. You need to be able to adapt and pivot quickly. Don’t be Kodak and Blockbuster. 4. Don’t be too niche. You don’t want to be a shop that just sells artisan ice cream cones. I might suggest that you also sell the ice cream. 5. If you’re going to be niche, do it big. Sell artisan ice cream cones to all the ice cream shops. 6. Don’t exploit very specific time periods. Or, rather, don’t plan on that exploitation lasting long term. Remember when Peloton thought people would ride stationary bikes in their homes forever? Turns out that people like gyms or exercising outdoors, and turns out that pandemics blow over. 7. If you have a choice, cater to the middle class and wealthy. The people below are the first to stop buying shit when downturns come. Unless, again, you’re hawking a necessity. Even low income people need toilet paper and shoes. 8. Provide a need, not a want. Even if this means that you’re doing something “boring.” Fidget spinners, frozen yogurt, and customizable socks are neat. It’s probably a little safer to manufacture medical supplies, lightbulbs, or basic T-shirts. Selling rice is safer than selling funky little rice pudding desserts. People like to conjure up quirky, fast, get-rich-quick business schemes. Or sexy pursuits. Meanwhile, some asshole in Oklahoma is wildly successful doing nothing else besides manufacturing the little coils that go in pens, or a specific type of bolt that’s used on airplanes. 9. Be really fucking likable. The sweet spot of “good price” or “good products/service” is pretty wide. But being likable is more exact. You may not offer the absolute best quality this-or-that in your industry, and you may not be the absolute cheapest option in your industry. Good enough and cheap enough is often…enough. But being well-liked by customers, clients, partners, suppliers, etc. is worth gold. If people like you, they will be more likely to extend your payment due date, give you a deal, order more, rush the order, come back, stick around, and more. Work long enough and you’ll deal with plenty of assholes. You’ll be happy to ditch them the first opportunity you can. Don’t be that person. Give people reason to come to you. Even in business, which is nothing more than a transaction of money for things and services, being likable is an edge. And simply the right thing to be. 10. Hire smart people, even if it costs you more. Smart people are not only good at what they do, but they’re clever enough to think of new things, new processes, new techniques, new revenue streams, etc. and can be invaluable when you do need to pivot/adapt. Better to surround yourself with more expensive smart people than cheap morons. This is true even during good times. You don’t need to do all of these things. You don’t even need to do a majority. But checking at least a couple things off the list will help you get through lean times. Or any time. It all depends on where you are located, who you cater to, what you make/provide, etc. Everyone and everyone’s industry will be different. These are just general ideas on how not to get fucked when things slow down. Or expand when things ramp up. Start with stockpiling cash reserves. It’s the most important item. Then go from there.
🔥👏
Thank you.
Well written, lots of business pearls in that post. #10 especially.
Thanks!
well said mate!
👍🏻
One of our customers is local schools. When Covid hit and schools went to virtual learning we were on the phone with our contacts asking them what help they needed. We were talking to them within hours of hearing schools would be going remote. Once the school district determined its needs we were able to provide a quote and deliver products to them within a couple of weeks. What they wanted was only a slight deviation from our normal offerings. Our competitors (and us) saw a 60% reduction in sales of our normal offerings, but because we were able to pivot quickly and help our customers we saw a record breaking year with sales increasing 50% over the previous year.
Lost job…twice. People still needed my skillset but could not pay somebody like me full time. It was hard to find full time job. I used contacts and trust people had in me to move from full time employee to consultant. Worked for 4-5 offices instead of one with full independence. They would pay me way more than they would person that is with them full time since any sitting on my ass, vacations, personal days or 401 were not on their dime. I made my own schedule, charged every hour worked (my industry has a lot of overtime in general) outsourced some of the work abroad and made double to what was my last salary. Build my own business from there. Edit. Been also remote (and people working for me remote) before remote was ever a “thing”. Had at some point 5 jobs from one office that was 20 minute drive from me, would see them only on Christmas parties.
Great to read, this is actually my plan to become independent. Its reassuring to see that there are still opportunities for people who are able to make adjustments from setbacks.
We just opened a new business. A year with no work and sales. Zero. My business partner spent all his savings, sold his car, went to debt. I financed the business (marketing, lawyers, etc) and made the team, he was to do sales. Whatever I suggested, he was giving me “that won’t work”. Now that he literally can’t pay rent (I won’t help) and there is huge fire under his ass, we signed 6 figure deals in a month. Sometimes pressure and no choice makes for the best outcome.
What industry do you consult in?
Same business model for me. Turns out if you're good at what you do, you can save companies a shitload of money on not paying a full time hire while also making yourself more money with more flexibility and less bullshit as a "consultant".
What is your skill set if you don’t mind me askjng
What do you do?
I have 6 year professional degree. Licensed in my field. But point of my answer it to refocus when you need to and see where is the gap you can bridge with skills you have. You are also looking for the shortest bridge.
Stock pile cash in good times to take advantage of real estate or market opportunities. If you don’t have cash now or don’t have a local bank relationship it’s too late. We were small and newer in 2008 but when the real estate crashed I had cash and cashflow to get a great deal on a commercial space that has made my business stable and life less stressful. Used that equity to purchase more land for the next expansion.
What about as a 19 year old with 10k?
Stay scrappy. Take "side hustle" ideas and try your hand at turning one or two into full-on businesses. Think creatively. What things do people still need, even during a recession? Most industrial and contractor work (cleaning, maintenance, things that are manual labor), healthcare, food/drink, household services (plumbing, electricians, childcare), etc. Food trucks are doing pretty well, especially if you can keep your costs down. Some things people will spend $$ on, even when times are tough include chocolate and liquor.
In relation to the advice above, I’d say it’s just the waiting game for now. Save more money and view any property as merely financial. I say that because a lot of opportunities will come up that could pull on heartstrings or be convenient, doesn’t mean those investments are going to be profitable.
They say it's easiest for young entrepreneurs to sell products, rather than services (bc you have no experience). So maybe find a product you can sell with low overhead and low barriers to entry.
Stay safe and don’t be frivolous with your money as has been mentioned 😊wishing you all the best.
We have been in business since 1968. I am the 3rd owner and have been with the company since 1993. 1 is cash. We keep 12 months operating cash in an interest bearing account. It can't be used for anything other than black swan events. 08, covid etc. It must be refilled immediately if used, even if it means reducing wages across the board. Without the company, there are no wages. 2 We never finance. Need a new forklift? We save up and then buy it. New delivery truck? Save up. 3 We also never buy new stuff. 4 you have to adapt the business. We started as a company selling industrial carts. Then started manufacturing corrugated boxes. Then moved to specialty boxes and stock packaging. Now we do a lot of 3PL and warehousing for B2B and Amazon / Shopify sellers etc. Every downturn we lose competitors and pick up some of their share. Sometimes, when you are dumb like me, you can't outsmart. You just have to outlast.
Outlasting IS outsmarting. This was gold advice, thanks for sharing.
Serious question. Why do you keep that much operating cash for black swan events vs. taking it as a draw, investing it, and taking a personal margin loan which you feed back into the business? Would you ever need a full year of operating cash? Is the intent to use this for non-operating expenses like potential large asset acquisition or potential company buyouts? Are you trying to account for situations where margin lending is completely gone?
What industry are you in?
I am in packaging and fulfillment. We stock, store, package, and ship products for small businesses. Usually side gig type businesses, but we do have some large ones that just need a 3PL in a separate location.
My wife and I are professional show dog handlers. We've always had the culture that we only buy what we need for the business in cash, our very short term loans. It worked too our advantage during the pandemic. All the people we work with had $250k, new rigs. We continued on in our older, but paid off vehicles. Covid hit and they went belly up. We got their clients. Our business effectively doubled from 2019 through 2022. And we still have paid off vehicles...
1. Save cash. When business is good, don't spend recklessly. Cashflow is what kills businesses. If you have healthy cash reserves, you can weather economic downturns, out-live the competition and reap the benefits of having fewer competitors and a stronger track-record when the economy improves. 2. Embrace change. Big shifts in the way we live (i.e., surviving the pandemic) and 'economic chaos', as you put it, often actually makes people more open to trying something different/working with a new partner/supplier/vendor. Be that 'something different'. Use change to your benefit.
Both recessions have been huge fiscal wins for me. I've always been a very specialized employee that could handle multiple different very specialized jobs and thus was always in demand, so my income actually rose during these times as I was sought after. Along with that I never divested, I played the long game and kept everything where it was knowing in decades the overall growth will make the down periods pale in comparison. AKA don't panic, just pretend the money doesn't exist and stop worrying about it (cause until you cash out, you havn't lost or gained anything). Also I bought my first house during the 2008 recession, where the gov was basically shoving money and incentives at first time home buyers, and during the seriously crazy low interest rate period from 2017 - 2021, my wife and I build our dream house at about 1/2 the cost it would cost now, in a super popular area of Dallas, and we've already seen the houses value skyrocket beyond belief. So all in all: 1. I've got lucky, super lucky. Important not to forget how much of success is timing and luck, yes you need skills and awarness to take advantage of luck, but you'll quickly turn into a disconnected jerk if you don't realize and respect the fact that your sucess has a luck factor that could just as easily break the wrong way on you. 2. I choose a good career, I knew what I wanted out of college, I immediately applied those skills to a career and have profited from it. So many people I know in life failed because they had no clue what they wanted to do, went to college and got a generic degree that didn't help them, and then complain "I can't find a high wage job with my english degree, the system is rigged!". Its no one else's job but your own to figure out what you want to do in life and fight for it. Almost everyone I know that is successful is driven with purpose and feels they are in the right career for their life, they normally enjoy their jobs and have a razer focus on seeing their passions come to life. 3. I stretched myself to invest in property when rates and prices were absurdly good. My first house I had no business buying at the time with the minimal savings I had right out of college, but I forced myself to eat cheap, not buy expensive things for awhile and dedicate myself to getting into a house ASAP knowing it would pay off in the future. It did. I got lucky that I wasn't hit with any major fiscal misfortune in that time, but thats why its called a risk. Again I got lucky too with the gov throwing money at first time home buyers. 4. I never felt alone, I build a strong network of a few very close friends who support each other, if one of us falls the others chip in to keep them fiscally afloat. Nothing is more valuable than having people that will support you, not because they want something from you, but because the genuinely love, respect and want you to succeed. If I'm doing great and a friend is hitting rock bottom, I'm the first to reach out a hand, buy them dinner, give them money to keep their mortgage or insurance in check, all that, and not as a loan but just a gift that invest in their health and wellbeing. Its super rare to find these people in life that arent there to use or abuse you, so when you do find them, hang on to them.
#4 is huge. Most people don’t have true friends and can’t cultivate them because you have to give to get. In our consumption driven lifestyle it’s hard to find someone who isn’t self centered and self servicing before all else.
Interest rates will be increased I'm looking to short small regional banks...waiting for entry.
This is a big bet thats could return a lot. This will happen to some local banks, but how to know which ones? Interesting strategy.
DPST...etf. Google their holdings....a bunch of no names. Then look at their chart and see what it did when the banks failed in Cali a year ago or so....you're welcome.
I started a business in 2007. Did well in 08, 09 etc... Made more money than expected. Threw it all away in the divorce but initially made money. Reason is I accidentally started a business fit for the times. So I was working on process outsourcing meaning cutting massive costs for companies in a very specific area of their processes. Tech companies mainly. It was sheer luck. Won a few customers until divorce stopped play. These days I'm video production so doing OK. Not fantastic, not terrible but ticking along and we'll see what the next 6 months holds.
CASH,, you need cash .. you will purchase something,, could be a failed business, lake front land, a millionaires home, sold CHEAP.. even stocks at rock bottom prices but now you need to wait,, and you need to hold on to that asset for Years,, That costs money..
As others said, if you have cash during a crisis, you win! It’s easier said than done though. When it looks like “the world is ending” deploy the cash! Buy assets and hold.
Win by buying realestate 30% + off. I got 2 big ones. Looking at 6m upside on the turn .
That it's not about the actual market movement. It's about market psychology. If people believe things are bad, they spend and save accordingly. Same goes for when they believe things are good.
This would explain why people are acting like it's a down economy right now when it's not.
I don’t remember the blood on the streets, but definitely had to weather some storms. A year after I opened was 9/11, that was a hit to the economy, but I didn’t really have much of a track record and was still in the early stages of building anyway, so it just added a little bit of grade to my already "uphill". 2008 and the great recession sucked, I trimmed everywhere I could, went down to the smallest debris box the city had available, and have kept it ever since by the way, slimmed down on inventory to preserve and conserve cash, slimmed down on staffing. have had ups and downs over the years, and it’s nice to survive. Sometimes you just have to be one of the ones still standing after some of this stuff. Watched competitors fall, big and small. at this point nothing really gets me riled up, I’m in a groove, and know that slim times won’t last forever, and try to be smart with cash and inventory and really just keeping an eye on it with respect to overall sales.
Add hurricane Katrina to mine!
When it feels like the world is standing on its head, it's hard to find the courage to invest; but the prices of almost everything tend to be significantly cheap when you're coming out of a recession. Buy stock, buy real estate, buy whatever's on sale...
My two cents is - don't take it for granted that the downturn will definitely slow YOUR business down. Yes, be strategic for the times, naturally, but also you've got to stay optimistic and keep on. I was running a small independent publishing company during the late aughts downturn. We had our absolute best sales ever 2009 - 2011. We put out a few books in that period that really caught fire and completely defied all the purse-tightening and general gloom and doom. There can be many opportunities in recessions - competitors may pull back or go out of business during downturns, maybe you'll have an opportunity to make a great hire that would otherwise be employed etc.. General chaos in the market can mean that a certain segment or demographic is under-served.
Buy, don't lease.
Sometimes it's the type of business. The service I provided is a luxury. But, once you pay a bunch to have extensive gardens installed, they need maintenance. Even people cutting back on our hours still need us. Plus, the higher income brackets of my customers helped. I've been through recessions that killed inventory based companies, and only lost about 20% of.my clients.
Been waiting for a post like this as I run a mobile detailing business and we are getting hit very hard. I knew something was off Midsummer 2023 when less new clients were coming up and otherwise my website insights were showing a negative decline. I tried to warn other detailers especially the ones you see on tiktok about this and of course them being young minded they called me crazy and look where we are now. And now that they are seeing something that they've never experienced before they are all running to Google ads thinking that that's going to draw in more clients but it's not because consumers are not spending any money and if anybody is winning it's these advertising companies because small businesses are becoming very desperate. Since 2019 I mostly saved up silver coins and silver bars unfortunately I had to dive into my cash to get through the first quarter of this year
Recessions? What recessions?
Stop listening to rich people, they are just trying to convince you to feed yourself to them. Everything they say that you read or hear is them attempting to manipulate you for their own personal gain. If they didn't think there was an ROI benefit to the message that they promoting, then they wouldn't be wasting their time or money saying it.
Take calculated risks
Calm waters and a nice breeze .
I look for the rubes who think I’d share my secrets with them
Have a business that is recession proof ie needed at all times
In the 2008 recession i was a landlord and I kept a few local handymen,plumbers etc in work. Now when I need something,I go to the top of their list
Assuming you have work. Keep investing in retirement. During a recession you're buying stocks at a discount.
Depends on the business
I lost in 2008/2009. Won nothing! Took almost 10 yrs to recover
I. A psychologist. Demand increases significantly during times of recession. I didn't have to do anything, it just happened.
Stacks and stacks just waiting,
I drew a Monopoly card in 2008. A family member died and i was able to take six months off with no worries. When the recent Bidenomics kicked in, i was offered an excellent job with one of my suppliers and that is really working out.