Lingering low oil prices
The continued impact of lingering low oil prices has had a mixed impact on the economy in Alberta where oil is one of the major industries. The oil industry has been the most severely impacted by low prices: most oil companies have made major layoffs to their staff and are struggling to remain solvent. Ancillary companies that are also dependent upon oil, also, have been negatively impacted.
Benefitting from lower construction costs
Companies that are not directly impacted by the oil industry are moving forward with minimal impact on their businesses. Some industries, in fact, are benefitting from lower construction and commodity prices due the lack of demand. Urban municipalities in Alberta – Calgary & Edmonton - continue to boast a robust construction industry benefitting from the lower prices and available trades.
Use slower times to plan and prepare for the upswing
Many small businesses have rode this roller coaster before and have learned how to cope in a recession market. Some companies use slower times to plan and prepare for the upswing in the economy, which inevitably happens.
Over the life cycle of any company there are ups and down – it’s a fact of business.
“Anyone can run a business in good times, but only a well run business can survive an economic recession” Michael E. Gerber
So, how can a business survive and benefit from an economic downturn?
The following are actions to take to minimize impact from a recession:
1. Plan ahead: have a plan in place for a slow down in the economy. Assume it is going to happen.
2. Keep your eyes and ears on economic trends so you will be able to identify a downturn and act proactively.
3. When it hits, utilize the slow down to fine tune your business:
- train & educate team members
- cut the fat that built up during the good-times
- develop systems which create efficiency
- expand into new markets
- investigate new products
4. Spend more time and money on marketing and business development. When it comes time for cutting, many businesses will make the first cuts to marketing, which is counter-productive and exacerbates the situation.
5. Take time off from work and recharge your batteries. There will be time to work long hours again when the economy picks up again.
In the course of running my business over 35 years, I’ve witnessed 3 major market downturns. In hindsight, it’s easy to see what should-have or could-have been done: I should have seen these downturns as opportunities. I may have not taken advantage of the economic downturns I weathered, but, based on my experience and advice, hopefully you can!
Remember, all companies who have been in business have experienced economic downturns.
Get a jump-start when the economy swings back up
Those who are ill prepared for a downward change in the economy simply go out of business. Many others eke out a survival by working long hours for little return on their efforts and endure the downturn with white knuckles and persistence. A select few companies perceive an economic downturn as an opportunity to tune up their business practices, while there is extra time available. These companies get a jump-start when the economy swings back up. These turn out to be the highly successful companies.