By Darren Shirlaw
Entrepreneurial businesses are often punished first when a recession hits, but can be the last to receive an economic uplift as the economy strengthens.
Action for the entrepreneur: understand economic timing
You've surely heard the saying: "First in, last out"? We are often the first to be cut from customer budgets and the last to be brought back in. Being first into a recession and last out requires some specific actions for an entrepreneur's business survival and future growth.
Entrepreneurs must understand economic timing by scanning the media's daily data streams. These help predict market improvement and, at a macroeconomic level, things are already starting to look up. The economic clock suggests we are currently at 8pm, which is described as a hesitant and uneven recovery.
Judging by people's business behaviour, most are still focusing on the word 'hesitant'. 'Uneven' describes the market swings because business confidence is still lacking. 'Recovery' is the third word and although it is certainly hesitant and uneven, it is still recovery.
How global is the recession?
Recently, I spoke to 90 people representing 22 countries and was fascinated to hear their different views on the global economy. For example, Australia and Poland are not in recession and have not been in recession for more than 20 years, while Asian markets continue to be buoyant.
At the other extreme, Portugal, Ireland, Greece and Spain are having a tough time. From these differences it is easy to see that the world economy is actually quite disparate; some regions are buoyant while others are almost bankrupt. This unevenness is creating the hesitancy that is buffeting the entrepreneur.
The world economy is certainly uneven and this also applies to businesses locally. In the same way that some countries are not in recession while others are having difficulties, at a micro level, some companies are booming while others are on their knees.
Action for the entrepreneur: prepare for growth
Because smaller businesses usually exit a recession last, entrepreneurs must prepare for eventual economic growth and get ahead of the queue. It is the front-runners who will gain the biggest uplift, which will carry them right through the next boom.
There is no point in entrepreneurs pulling the sheets over their heads while waiting for the boom times to return. You can make money in an uneven economy, but you'll need to focus.
A good business, with good sales people and good products will easily make money in this market – and some entrepreneurs are definitely making money. Entrepreneurs are unlikely to exit this recession with the corporates, but getting out after them will enable them to generate more growth. The last thing you want to be is last.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
