How are you preparing for the potentially extended long-term loss of income/revenue?
Just as we diversify our stocks, bonds, and funds portfolios I like to apply the same principles to my entrepreneurial ventures. I am fortunate right now to have BartenMEDIA to fall back on. While still young and not profitable in the sense it can support anyone outside of our team members it has shown a lot of promise as this pandemic has taken hold. I have often considered a multitude of facets and possibilities when developing my business plans and launching my ventures, but this one, this idea of a pandemic, escaped me.
I have always considered, reasonable and anticipated economic swings, to include bull and bear markets, recessions, and potentially even a depression when designing my ventures. For example hockey always does well when people have money. A good economy certainly grows the game exponentially. Just as young people who have to enter the workforce during a recession, or extended bear market, are likely to make less over the course of their careers. The same is true for hockey. If you are one of the unlucky individuals to be born during an economic downturn, where your parent’s disposable income has shrunk significantly or disappeared for a period of time, you are less likely to ever play hockey. Hockey is a game where if you don’t start young you are far less likely to start at all. Ice Hockey requires learning two sports in one. You must learn to skate, and almost simultaneously begin to learn the mechanics, stick handling, systems, and rules of hockey at the same time. By 8 years old you are likely already at a serious disadvantage to your peers, and this gap only widens the longer you wait. Not impossible, but the learning curve can be steep. Just like these players, the ice rink struggles to attract participants during downturns. It’s not impossible, but it is more difficult.
Junk Removal is more recession proof. It is somewhat similar to insurance in that capacity, except where insurance customers stay relatively the same demographically, the Junk Removal customer changes. We go from working with middle-class and upper-class clientele in good times to working largely with property preservation firms, banks, and foreclosure specialists. When the economy begins to sour many people have to make hard choices and realize heart-breaking realities. When times are good people live well, unfortunately often times, when the forecast dims, things get tough. People realize they have been living above their means and do not have an immediate plan to address this hardship. People downsize, move jobs, lose their jobs, their homes, etc. As this happens Junk Removal firms play a large part in assisting the new property owners (banks typically, or some packaged securities version of a bank) rehab and remove the unwanted items from the homes and ancillary structures as they prepare the properties for resale.
This comparison between the hockey world and junk removal world offers a small insight into the idea of diversifying your ventures. How about the Media Firm. Marketing when done right can also be fairly recession proof. As disposable income becomes scarce, firms, especially small firms, have to fight harder and harder for that customer. To make matters worse each customer typically becomes more valuable the longer hard times continue. Marketing in down markets is when marketing matters most. Don’t close up shop, don’t cut your spending there (take that with a grain of salt. Expenses are like toenails, they always need to be cut, but don’t cut off your nose despite your face). Marketing can help keep those customers coming in the door, ringing your phone, hiring your service, or ordering your product.
While this conversation has been great so far, what is the point? The point is this is all excellent explanations for understanding an expanding economy or a receding economy, but what about right now? The economy has ground to a halt. If this is quite temporary it may not have a major effect, but what happens if it continues for 6 weeks or 3 months? How will you (the entrepreneur) survive? You have to consider a pivot. What can you do to repurpose your skills, your tools, your equipment, and your staff to again begin providing value to the economy? Look at Hanes and GM. They have originally had to close their doors during this crisis, but are now slated to work with the government to begin producing much needed hospital masks, hand sanitizer, etc. This a brilliant and necessary retooling of their facilities. This will keep people employed, making a difference, and providing for their immediate family (likely their extended family too).
How fast can you learn new things? Study new ideas, needs, products, and services relentlessly until you find one that you can compete in as soon as possible. The economy is stopped, but demand continues to rise. Find out what the products and services are people need right now and start working on it. Do the math. Figure out what you need to invest, how soon you can recover that investment and how long this venture needs to function to be profitable.
This last point is an important one. Your venture does not have to continue on indefinitely. In college they teach you that a Corporation can live forever. That doesn’t mean your venture has to. If it develops into something bigger and better than you anticipated, great! However, figure out what you need to get out of it to get through this tough time and then re-evaluate what you’re doing again at that point. Eventually we will return to normal, unfortunately it doesn’t appear it will be too soon.