Listen to Erik share the takeaways he had from his recession experiences that can help your business be recession-proof in this episode.
Erik J. Olson (00:01):
How to make your business recession proof. What is happening? I am Erik J. Olson. We may have a recession coming. So I’m, I’m recording a couple of episodes about the recession because I’m asking people what they want me to record about, and that keeps coming up recession. Are we in a recession? What should I do in a recession? So this question is how do you make your business recession proof? Great question. Now, look, I’ve only been through, uh, in business as, as a business owner, two recessions one was 2008 and not as a digital marketer, uh, is when I owned the bakery with my wife, we went through, we opened up the business in 2007 and 2007, basically sucked. And then 2008 was, uh, more suckage <laugh>. So like, uh, in, in that business it was terrible. Um, the, the sales just dropped off a cliff and it was, Hmm.
Erik J. Olson (00:59):
It didn’t work out. I didn’t learn a lot besides, uh, it sucks being in retail and, and food service, which I’ll never do again. All right. So that was my first experience, uh, being a business owner in a recession, I second was, um, in 2020 with the coronavirus pandemic, and then the recession that immediately like, immediately, like the economy was like, do, do, do going up, up, up, and then bam, straight down. Like if you see the charts that talk about like, uh, how the recession affected the, uh, us, it’s like, it’s literally like straight down, boo, and then a gradual incline out of that. Um, I, I had prepared a couple years earlier for the recession. I did a lot of, uh, reading on the topic, blog, post articles, and I read, uh, at least one book, maybe two on how to recession, improve your business.
Erik J. Olson (01:51):
Cause I anticipated a recession coming. People were talking about it coming, but I, I had no clue why or what to do about the recession. Now my thought was when a recession hits, what do I do? And the answer that I got from the research that I did was well at that point, it’s too late. So if you wanna recession proof, your business, you do it well in advance. And, and like, there’s again, I read, I read plenty of articles and blogs. I talked to a lot of business owners about this. What are you gonna do? What, what did you do last time? A lot of business owners did not learn from the previous recesses. I met with a guy who’s probably about, um, 65 years old. Um, he’s been through as a, as a marketer. He’s been through three recessions and I asked him, Hey man, what, what is the secret you learned from being through those three recessions? And his answer was, I don’t know. <laugh> I, I swear it was, it was like that colloquial, like, mm, no, I’m good. I just hope for the best. So a lot of business owners don’t actually learn. So getting back to my
Erik J. Olson (02:58):
Story, what did I learn when I did that research and what actually happened? What I learned was, uh, there’s not much you can really do at the moment. The, the recession that, that you’re in the recession, what you can do is prepare for recessions, not knowing when they’re gonna come up. And the way that you prepare is this is how this, this, this is the point. And the takeaway, the way that you recession proof, your business is you run a good business. Like it’s that simple. You run a good business before the recession, so that when you’re in the recession, you have clients, you have clients that are under contract and you have real high quality, good services that your clients can’t live without you do those things. And you just recession proof your business. Why? Because what here’s, what’s gonna happen. When a recession comes, people stop spending money, and they’re gonna look at all their bills.
Erik J. Olson (03:57):
They’re gonna look at all their obligations. And if you okay, like, number one, if you have a, a product that just kind of sucks and you know it, and they know it, your clients know it. Guess what? When they’re like, oh, I got laid off or I don’t have the money, or I need to cut. Really what’s gonna happen is they just need to cut. They need to cut some bills. They’re gonna cut yours. Why? Because your product sucks. So, number one, you have to have a good product. Number two, if you have a contract they’re morally and legally obligated to fulfill that contract. Now, it doesn’t mean that they’re going to stay right. You can’t force someone to continue to pay you, even if they’re under contract. Now, what you can do is, um, if you want, you could enforce the contract by taking them to court, right?
Erik J. Olson (04:44):
So just the fact though, that you have a contract where they’ve obligated themselves, you’ve obligated yourself. You’ve both said, we’re both gonna do these things. I’ll provide these services. You provide me with money because you’ve done that. And it’s a, in a legal document, they are legally obligated and morally obligated to fulfill that obligation, which means they probably won’t cut that first. They’ll probably cut the other crap that they’re not legally obligated to. So, and, and then you have to have great customer service and it has to be something that continues to provide value through a recession. So if you have something that could just, you know, like, uh, I’m just gonna make up an example here, like high end restaurants during a recession. I, I don’t think I, I can’t imagine they do that. Great. Right. I just can’t imagine they do that. Great. Because you don’t need to go drop 300 bucks at Ruth Chris, right? Uh, so like you, you could do without it. So I, I would imagine that they are not recession proof, that they get hit really hard with recessions. Something like digital marketing, believe it or not. Like we did great during the coronavirus recession that happened the, you know, maybe six to 12 months after
Erik J. Olson (05:57):
Hit, uh, why maybe it was just the luck of the draw, because like in advertising and marketing, those are the first things get cut. But if you cut your advertising, you cut your marketing, you’re cutting your revenue flow. Like if you’re not out there making noise and getting attention and getting leads, which is what advertising and marketing does for you, then you don’t get new clients. You don’t get new revenue. Like you’re screwed. Like you might as well just shoot yourself in the thigh or the foot or wherever you want, because you you’re basically playing defense at that point. You’re just hoping that you don’t, that, that your money doesn’t run out. So like, but with digital marketing and we have so many tools, so many levers that we can pull that clients don’t want to cut that, but they will cut something like TV first.
Erik J. Olson (06:41):
They will cut something like billboards. First. They will cut something like newspapers. First, by the way, I had a guy I’m gonna do a whole episode on this. I had a guy that I interviewed the other day on our lawyer podcast, the managing partners podcast. He still uses the yellow pages. I only do an episode about that. He’s the first person I’ve talked to in probably 20 years that actually even knows what the yellow pages are as far as like, <laugh>, it’s crazy. But anyways, I’m way off topic. How do you make your business? Se recession proof. You run a tight ship, you run a good business and you do that before the recession.