Economic recession has always been an unwanted guest in the business environment. It sneaks up on you with no warning, and you can never know when it’ll pack its bags and leave. A recession is the time when profits take a nose dive, millions lose their jobs and the prices of products and services soar.
This may sound like a shock, but just the way you have businesses that go bankrupt or struggle to break even, there are businesses that make millions during the recession. Companies like Procter & Gamble, Macy’s, Netflix and a host of others defied the hopeless norm of economic recession and thrived through it and are still going strong.
What makes them different from the businesses that fail during a recession is that they viewed the scenario with a different perspective. When you capitalize on these differences, you too will also be able to not only survive but thrive through the recession.
1. Leverage an urgent consumer need.
“Recession does not mean that the people suddenly stop spending money,” said Will Rees, director of Worktop Express. “Price comparison certainly becomes higher up the agenda, but people don’t buy on price alone. In my opinion, there is a real shift in priority towards value, during a recession. The consumer will carry out a fair degree of research — and will usually choose to purchase the item that represents the best compromise between price and quality.”
For instance, plastic credit cards were created to deal with the problem of fading cardboard credit cards. Airbnb came about as a new way to face the issue of expensive lodging, and it’s still doing well. For similar reasons, companies like PayPal, 2Checkout and TransferGo are also still thriving: they solve the funds-transfer problem.
2. Source capital from investors.
If you have a promising project or business model, pitch your business idea to an investor. The objective is to solicit enough funds to get the business up and running and unleash its full potential to hit it big in the market.
In the words of Matthew Tagliavia of Fund an Idea, “Angel Investors and venture capitalists are always on the look-out for promising businesses that have the potential to give high returns on investment.
3. Invest in personal and business development.
When facing past recessions, the difference between those who stayed afloat and those who soared was usually in how open they were to new innovations or new ways of thinking. Reading books and going for seminars or trainings are non-negotiable factors for running successful businesses. One characteristic most successful entrepreneurs have in common is that they are voracious learners.
Recession is never an excuse to allow the quality of your business to wane. Developing yourself and your business makes you stand out from your competitors.
4. Find creative alternatives.
During the 2008 recession, companies were closing down their branches due to the cash crunch. Macy’s took a different path — it took to creating virtual stores on the internet where customers could buy products from the convenience of their homes. Other companies, like Ford, Alaska Air and VW, also found creative alternatives.
Coming up with convenient, innovative and cost-effective alternatives will make your business more attractive to consumers. This is because during a recession, consumers look out for better deals.
5. Don’t slow down on advertising.
As funds start dwindling, companies start reducing advertising budgets. Although this helps them cut costs in the short run, in the long run they start losing relevance in the eyes of the public and are soon forgotten.
More customers patronize the heavier advertisers because that advertising builds trust in the minds of their customers that those businesses are stable.
Recession: A great time to invest
Recession (Image credit: Skynews)
Following the 2008 global economic crisis, countries around the world put in modalities that have seen post recovery global economic growth that has been positive in the past decade. IMF projections had estimated global growth to rise from 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent in 2021 and these projections are justifiable given the economic fundamentals that existed at the time of estimation. However, the emergence of the COVID-19 pandemic which was unpredicted and hence not factored in estimation as an assumption has negatively impacted growth which is estimated at -4.9 percent in 2020 according to the World Economic Outlook statistics. Other than the health impact that has caused over one million deaths globally, the pandemic has disrupted global supply chains and each continent has seen millions lose employment and livelihoods, business operations have been altered and production reduced.
As a consequence, the Coronavirus has triggered a recession, much deeper than the 2008 financial crisis and worse than the “Great Depression” of the early 1930s. A look at all the happenings of the year acts as a disincentive to would be investors that would view the fragile environment as a ground for breeding losses if they are to invest.
As in any tournament, one’s misfortune is another person’s fortune and as such, the recession period would be a good time for identifying opportunity and exploiting all avenues of profit maximization. But a recession signals the downfalls of many businesses, increased losses and unemployment among other things, why would it be a great time to invest?
Access to cheap labor force
The world has become so competitive such that attracting the most skilled and educated labor force comes at a huge cost. Companies have to incur a huge expense on renumeration in order to retain the best minds or else, competitors would easily snatch them. During a crisis such as a recession, the demand for jobs is higher than the supply because many businesses are closing down and as such, a business may be able to acquire the skilled labor at a cheaper price. Because of the scarcity of jobs, employees would be more than willing to work at a lower wage and therefore, a firm that invests during this time can take advantage of this reduced cost.
Building business resilience
If a business is able to start at a time when the economy is nose diving, it learns techniques and strategies on how to overcome certain challenges and be able to mitigate them in the future. Enduring a fragile environment and navigating through it helps in building resilience that will help overcome future factors. This also helps in building a loyal customer base who are impressed with the fact that the business was able to provide the products and services at a time when many began to close. Because of the trust and belief that customers have in the business, this could lead to an increase in the profitability particularly due to increased referrals and positive world of mouth that’s acts as free advertisement for the firm.
Reduced financing cost
A higher interest cost is often a hindrance to access to finance because it discourages businesses from borrowing. As a response to boost economic activity, many countries around the world have decided to slash the interest costs. Central banks are pursing expansionary fiscal policy despite the rise in inflation but this is all in an attempt to ensure that borrowing costs are reduced and businesses are able to borrow and boost their production. Investing during such a time will and taking advantage of lower financing costs can help a business establish itself quickly and produce to meet the demands of the society. Further, during a recession, governments often give tax incentives to help companies navigate the crisis and so, investing during this period enables the enjoyment of this incentive.
Market penetration opportunity
Most of the product and service markets have been flooded with competition such that it is difficult for new entrants to enter. However, during an economic downturn like a recession both small and large companies struggle to adjust and survive in a crisis and this means that they are vulnerable to new entrants. Further, many new opportunities for new products arise during a crisis that can help a business. For example, the emergency of the COVID-19 created a need for facemasks, sanitizers, remote working and many other needs that have enriched businesses and individuals that took advantage of the opportunities. Identifying opportunity can make a business penetrate the market, outsmart competition and make profits.
During a recession, the country’s currency often depreciates due to lower production not earning foreign among other factors. But this works to the advantage of firms that export because a depreciation entails that their products are relatively cheaper compared to other countries and because the recession is affecting many countries, it provides a chance for increased demand for the products and hence the profitability of the firm increases. This can help companies to penetrate foreign market by taking advantage of deficit products and producing them.
However, it is not all investments and businesses that can be undertaken during a crisis and an error to embark on them can lead to serious consequences. The focus therefore should not be on short-term benefits of having to launch the business in a recession but also balancing this with post crisis planning on how you want the business to succeed. Some gains may be temporal and business may not be sustained over a longer period of time and as such serious scrutiny of the business must be undertaken to plan for the long-term objectives of the business. To the would-be investor, it is important that you are not profit driven by rather seen to provide what people need during and post-recession and this will help establish the company quickly and provide prospects of future growth and resilience. Don’t miss the opportunity, invest now!
Author: Nchimunya Muvwende (Economist)
OPIO, Egypt’s leading women’s clothing and lifestyle brand raises USD 300,000 seed round
OPIO, Egypt’s leading DTC (Direct to Consumer) everyday women’s wear brand has raised USD 300,000 investment in a seed round from AUC Angels, local and regional angel investors along with follow-on funding from Flat6labs Cairo.
Launched in 2017, Opio started as a digital native vertical, capitalizing on the long-abandoned Egyptian apparel industry and the surge in online shopping demand. OPIO commissions white label and toll manufacturing women’s wear apparel to different manufacturers and offers it to it’s ever growing customer base at affordable, competitive pricing through its digital platform www.opioshop.com
OPIO caters to people’s desire for simplicity. They seek to eliminate the hassle of researching brands and choosing from numerous options, to make the shopping experience more effortless. The company develops strong ties with local manufacturers, markets, and distributes their own products without using middlemen, which enables them to reduce costs, interact directly with consumers, and provide a seamless start-to-finish buyer’s experience.
“What I see in this market is a huge supply-demand imbalance.” said Shady Mokhtar the co-founder and CEO of OPIO, adding “Egypt has thousands of manufacturers with exceptional manufacturing capabilities yet, a total lack of modern day customers requirements, up to date fashion trends and marketing know-how, specifically in digital marketing practices.”
“On the other hand we’ve witnessed some jaw dropping internet penetration in Egypt the past 10 years, a hyper exposed gen Z, with very limited online offerings.”
“We’ve proven that we can develop a value proposition that can easily compete with international brands, Egypt is full of design and creative talent. Backing this up by relentless focus on customer experience we are confident that we can easily add a strong mark on the local and regional online fashion market.”
Added Reem Abdellaftif OPIO’s Co-founder, Creative Director and Designer-in-Chief.
Over the past couple of years, OPIO’s focus was in developing strong supply chain capabilities and bring onboard a team with a diverse caliber, from digital marketing specialists, to tech experts, as well as fashion design and creative teams. The company acquired talents from reputable e-commerce companies to gain a deeper insight into scaling.
Yaser El Khereji CEO of Albasateen trading company and one of OPIO’s lead investors, says, “We were impressed with Opio’s unique value proposition, We are planning on providing OPIO with the logistical infrastructure they need to set up a strong foothold in the GCC region. With a special attention to localizing the brand to further appeal to the target demographic.”
Mariam Kamel from AUC Angels said, “OPIO has been very responsive to market trends, both in terms of how it interacts with its clientele, and how it reacts to changes induced by the recent developments in the digitalization of the shopping experience. They’ve revised their business plan when they’ve needed to, and established key partnerships where it was beneficial. Shady and his team move fast, and always have news to share on what’s coming next.”
Opio addresses a unique market opportunity that manifested itself with the outbreak of Covid-19 and the major shift by Egyptians towards on-line transactions, the highest of which being in fashion (as highlighted by a MasterCard survey) and an strong team that share a passion for the fashion industry,
strong belief in the creative talent in Egypt, and the operational knowhow needed to deliver an a-class customer experience.
Flat6Labs is a true believer of the OPIO brand and the team behind it and is a proud partner and investor. “We stand behind the team as they take the business beyond borders and scale into a regional and an international brand”, commented Marie-Therese Fam, Managing Partner of Flat6Labs Cairo.
Issued by AUC Angels
Play Zuri Health launches its first mHealth App to help provide affordable and accessible healthcare solutions
Play Zuri Health Limited Mobile App (Source: Zuri Health)
Play Zuri Health Limited, a branch of the Play Communications Limited announced the launch of their first mobile app, Zuri Health; that can be downloaded from the Google Play Store, Apple Store as well as the Zuri Health website.
Zuri Health’s mission is to provide certified, affordable and accessible healthcare solutions via mobile with dedicated apps, wap and SMS services based on availability, location and specialization of the medical providers.
Users will have access to a myriad of professionals and services from across their home counties. They are able to book appointments instantly with any medical professional or hospital within their geographic regions, book laboratory tests, chat with the practitioners via both message and video as an added feature and request for home visits by the Licensed and Certified Medical Practitioners.
Under Pharmacy, users can get their prescription and over the counter medication online and have it delivered to their doorstep.
The SMS service functionality of Zuri Health has been designed to reach a wide range of individuals or users who may not have access to WAP or internet enabled devices.
The app’s code was written with the daily challenges patients face in the journey of seeking affordable and accessible healthcare solutions. We solve the problem of expensive and inconvenient hospital trips for small or minor diagnosis and prescriptions, long waiting times and queues during doctors’ visits and appointments scheduling and booking which can be tasking.
Through our mobile app, we also help doctors to tap into a wider market of on-demand patients and earn extra money while saving lives.
“Zuri Health App is very personal to me. Millions of people in Africa do not have access to quality medical care. At Zuri Health we have taken time to develop a product that will fill that gap, giving doctors a wider and easier platform to reach patients who need them. With Zuri Health the underserved populace can now access affordable and sustainable healthcare.” Arthur Ikechukwu Anoke- C.E.O and Co- Founder Zuri Health.
Daisy Isiaho Project Manager and Co-founder in an interview said, “In my view, there is an urgent need to drive more meaningful conversations in relation to frameworks around Telemedicine because in Africa very few countries have these yet its fundamental if we should achieve the Sustainable Development Goals.”
Since the beta launch in November 2020 the company’s predicted three year growth plan is to have more than 20,000 registered doctors listed, 250,000 premium users and at least 1,000,000 mobile downloads.
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