5 ways Startups can sail through recession crises

Sledge, not his real name, slurs incomprehensible words, euphoric in a newly found utopia. His king-sized bed, a pile of waste, discarded plastic bottles, rusty cans, and stinky Tetra park milk cartons, is his treasure trove.

This mountain of garbage a sore sight to some is his family’s livelihood. Sledge is an Entrepreneur, a hustling businessman eking a living out of garbage, living in the streets of Nairobi, with his wife and Kids. Teresa his wife is sober; she has been so these last two years.

In the absence of her inebriated husband, she is the General manager, the Accountant, the Marketer, the Cashier, and the Logistics officer of their business.

Sledge is not alone in his drunken stupor, his 15-year-old son lies next to him curled in a ball, lost to the world, inebriated by a mix of alcohol, hash, and glue, stuff he has been sniffing since he was five.

Teresa strangely finds solace in loneliness, years of cajoling coaxing, and caring for a reckless, uncaring and sometimes violent husband have worn her emotions thin. She really doesn’t care anymore, especially now that money is drying up.

Her focus is to provide for her five children, a 14-year-old daughter, a ten-year-old son, and three girls aged 8, 5, and 3 from the meager earnings of their waste business.

None of her children has an education despite the government’s best effort to give free primary education, they didn’t find the need for it, besides you don’t need much education to rummage through dustbins for recyclable waste.

I ask her if she has been affected by the recession, and her response is “not much,” she still has to scour through the city garbage to build a sizable treasure trove of recyclable waste though. It’s a never-ending chore they must carry on if they have to eat.

Lately, she has however realized that there has been a reduction of quality, recycle aluminum soda and alcohol cans, as people switch to drinking bottled drinks.

Then I mention the rise in prices and her face darkens, “that,” she says “has hit her hard,” as prices of consumer items double sometimes quadruple, her meager earnings seem to vaporize in the grocery store across the street. She is not sure of what’s going on but she knows it’s not good.

Teresa is not alone as the world realigns to the threat of recession, and a financial crisis looms, there is no bargaining with inflation. It’s pinching middle-class pockets, pocket-less street vendors, unemployed citizens on welfare, and hard-hit street families like Teresa’s.

To make sense of all this inflationary talk, I have been listening lately to lots of financial gurus — self-made millionaires, wealthy influencers, and savvy money market advisors. They all have golden advice for anyone trying to make sense of inflation.

And they are propagating a common mantra, — ‘recession crisis is a “perfect storm” for anyone seeking to soar into wealth.

They are making these interesting statements -‘cash is king in recession’ they say, ‘it’s time to buy’ — ‘invest in real estate’ ‘take advantage of tax breaks’ ‘build lean business’ and ‘set up your startup to cash into new opportunities.’

I am not an expert on recession but as an Entrepreneur, I can tell you one thing. — The experts are right and you are better off following their advice.

Here is why:

The perfect storm

It’s a perfect time to soar, to take your business to the next level, to launch that startup and cash into glaring opportunities popping up everywhere as populations across the globe buckle up and shift their spending habits.

That’s probably true because every crisis though deeply unsettling is a seed of opportunity. It has a seed of change and represents a new beginning.

As our lives become more disrupted and cash dries up, unpaid bills weigh us down, anyone staying sober to find solutions out of this universal predicament will soon find out that they have to start all over again on a new trajectory.

And that’s the perfect storm a time to launch your startup, a time to explore new opportunities for your business.

This is what you should do:

Start by unlearning:

Unlearn, everything that you know, stuff that didn’t save or protect you from this glaring financial ruin.

Then you have to re-learn. Learn new processes, learn new skills, learn new ideas. Ideas that will give you an edge over the competition.

Think ahead:

Visualize financial liberty, start planning against the potentiality of financial ruin and build guardrails around your money. What other ways can you increase your income streams even as you become frugal?

Recession and inflation may interrupt your life, but you are still here. It’s time to reflect and reconsider, cushion your future, create new money habits, devise new strategies, organize new priorities, and focus on what matters.

Think like a Brand:

During a crisis, successful brands remodel their identity, they play on their strengths to cash in on opportunities. They innovate to remain relevant while seeking creative solutions.

Think like them remodel your business, play on your strengths and watch out for new money-making opportunities.

Conserve Cash:

During a recession Companies conserve cash. As the economy slackens they buckle down, cut off unnecessary spending, and plug wasteful expenses to stop cash hemorrhage. They downsize or put off unnecessary projects.

That’s what you should do too, conserve your startup’s cash, prioritize your expenses, and outsource services if it will save you money. Focus on holding onto as much cash as you can.

Invest:

Investors on the other hand look to invest in counter-cyclical industries, businesses that thrive during downturns. They look for agile companies that are ready to seize opportunities. Businesses that thrive in a recession.

You too can invest in these businesses, look for thriving businesses in essential services, such as streaming services, video games, computer equipment, and cybersecurity and IT support health care, senior services, grocery stores, and maintenance such as plumbing and electrical.

Embrace  consumer changing behavior:

Our digitally propelled world evolves every day; consumer behavior shifts with every wind of change. Microsoft Advertising algorithms identified four kinds of newly evolved consumers

These are:

1. Digital nomads:consumers who value flexibility and minimalism and are focused on traveling to experience and see the world.
2. Empowered activists:These look for brands that align with their values. They buy from companies that rally for inclusivity, ethical standards, or privacy.
3. Luxury shoppers:These have money and are willing to splurge this money on luxurious items, mostly online and of course in person.
4. Self-care enthusiasts:These spend their time and money on brands that support a course. For example, they will quickly spend their money on companies that promote mental health and physical well-being.

These customer types were the product of the pandemic. This recession presents another opportunity to observe changing customer behavior. Think of how your market will evolve, and how it will react to financial shifts. Make smart moves to adjust to these new needs.

An economic downturn is always a perfect opportunity to discover new markets and to launch new products it’s also a great time to look for potential alliances, or acquisitions — businesses that will synergize with your startup to create greater market awareness.

Invest in digital marketing, and create a proactive content strategy to get your consumer’s eyeballs on your brand.

Tap into Google’s power of “micro-moments,” — consumers constantly search on Google and other search engines for information, any time they need to know something, buy something, do something, or go somewhere.

In Closing:

This is the perfect storm. It’s time for your startup to soar, ride economic disruptions, sail through every wind of change, remodel and re-create your brand’s image, to explore and capture new markets.

This article was first published Here: Why Recession Crisis Is a Great Time For Startups To Succeed