The economy is cyclical, which means we cannot sustain growth indefinitely. When growth happens too quickly, it can lead to a bubble and subsequent collapse. We saw it with the housing bubble ten years ago and even though economists were ringing the alarm bells for years, the warnings went unheeded and the country found itself in a deep financial crisis.
ContentsAll the signs point to a recessionWhich sectors continue to perform well in a recession?How to prepare your business for the next recession?An ounce of preventionThis is why managing economic growth is so important.
Incremental gains lead to incremental retractions that spread the economic struggles much more smoothly over a longer period. This is a recession that many economic indicators are currently pointing to.
If you woke up tomorrow and realized we were in a recession, would you be ready?
Last year, more than one in seven Americans were three months or more behind on car payments. This is a potential signal of an upcoming recession.
According to Bloomberg, there are other signs of recession to note:consumer and small business confidence has fallen, as have manufacturing sector surveys and global growth. On top of all this, the trade war and tariffs are making investors nervous. The stock market reacted wildly, posting record one-day losses on top of weak rebounds.
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We've all heard of the lipstick effect in which lipstick sales often jump during economic downturns. While lipstick, in particular, may no longer be the indicator, global cosmetics sales still tend to do very well during economic downturns. In fact, during the Great Recession, cosmetics outperformed the great economy by 45%.
Other sectors continue to experience growth during economic downturns. One of the most notable is the alcoholic drink. In the United States, sales of alcoholic beverages actually increased by $2 billion during the last recession. Other so-called vice industries such as candy and tattoos also tend to do well during recessions.
Since death and taxes are the only constants in our lives, it should come as no surprise that funeral services and accounting services tend to hold their own during tough economic times, although sometimes people will reduce their overall spending in these areas. . Medical spending also continues to see growth, no matter what the big economy looks like.
Surprisingly, luxury goods are another area that boomed shortly after the last recession – while Wal-Mart sales jumped 5% during the recession, global sales of luxury items rose 10%. % just two years later, while the rest of the economy was still recovering.
No matter what industry you're in, you can take action today to help your business weather the recession. Having all your ducks in a row ahead of time will save you from struggling or even collapsing when times get tough.
After taking note of what makes businesses recession proof, it's time to start applying those lessons to your own business. Some of the actions you can take today include:
No one knows when a severe recession will hit. Usually, by the time we know it, we're already right in the middle. Preparing your business for a recession is a good thing to do, even if you are not convinced that such a situation will come anytime soon. Waiting for a recession without preparing is likely to have a bad end result.
We can all learn from recession-proof businesses and make all of our businesses stronger in the process. Learn all about recession indicators and how to prepare your business for the next recession with the infographic below.
Is your business ready to become a recession proof business?
Source:Top Business Schools
