The word “recession” can scare any small business owner. For most, just the possibility of having to cut employees or close their doors is chilling. As small business owners were some of the hardest hit in 2008, the idea of another economic downturn sounds especially terrifying.
However, although most economists predict another recession soon, this isn’t exactly a bad thing. Recessions are pretty commonplace throughout history, with 2008 being an anomaly out of the bunch. In fact, some entrepreneurs found the recession to be one of the most advantageous times to be in business.
Small businesses are some of the most innovative assets we have. A lot of the lessons learned from the market crash brought on new marketing and advertising strategies, such as the rise of social media, as well as a complete transformation in lending practices.
The Great Recession undoubtedly caused a lot of damage to the small business community but didn’t necessarily kill the industry entirely. After all, small businesses make up over 115 million jobs in America, providing over $33 trillion dollars in sales and services.
2008 saw a huge change in how lending practices were handled for small businesses. While banks and credit unions were traditionally afraid of the volatility surrounding these types of businesses, non-bank lenders rose to the occasion, utilizing peer-to-peer marketplaces as well as crowdsourced lending to meet this need. Because of this increase in competition, interest rates have remained at a competitive point for the past few years and firms have reaped the benefits. Non-bank loans have allowed for more negotiation over rates, and these lenders have been more accommodating in terms of smaller loans as startup costs have decreased.
Another change is the drastic shifts in marketing and advertising strategies. According to the New York State Small Business Development Center, small businesses that continue to put forth the same efforts to their advertising budgets saw a dramatic increase in sales. Additionally, those that have upped their online advertising and inventory saw an immense amount of success as well. We also have to remember that in 2008, social media was in its infancy, but now, it has now transformed into a multi-billion dollar industry, and has saved a lot of small businesses.
Advertising and guerrilla marketing via social media completely changed the game for small businesses, allowing them to gain the highest ROI on media while spending the least. Not only is it virtually free, but it also allows mom-and-pop shops to have a genuine “mom and pop” approach online. This has brought more awareness to the partnerships, events, and sales being offered within communities.
As much as it hurts to say, the financial downturn provided some valuable lessons in how businesses should approach the economic climate in the future. Some noteworthy points for thinking ahead included keeping larger cash reserves, acquiring liquid assets that are at lower devaluations, and finding ways to maximize ROI for marketing efforts.
If you keep these principles in mind, your business will not only survive the next recession but will thrive. A similarly grave situation to 2008 doesn’t seem to be likely, but a recession is. Plan accordingly, and it can become a catalyst for growth.
A fear of recession should not derail your business’s growth plans. Currency vast network of lenders and industry expertise can match your business with the best available loans. If you have any questions about financing through Currency, contact the team today.