SOMETHING ABOUT RECESSION
What happens in a recession? I really don’t know. I just became an adult. The fact remains that many don’t know we are in recession or not. That’s something about recession.
I’ve been hearing warnings about a recession for the last 5+ years.
Back in 2017, a lot of smart people I know were talking as though one was imminent…
Yet instead, we had another 5+ years of crazy growth…
Which was caused by a variety of factors, including the Fed pumping cheap money into the economy (which is a big part of what’s led to the inflation we’re dealing with now).
Yet while the bears were wrong in 2017…
I’m pretty sure they’re right today, in 2022.
Barring a “positive” Black Swan event of some sort…
My guess is that we’re already in a recession, or about to enter one and that’s something about recession.
I’m obviously not alone in this sentiment…
Just yesterday Elon Musk said he thought we were probably in a recession and that it’ll last 18 months…
And news sources like Bloomberg, Business Insider, and the Wall Street Journal are publishing “dire warnings” from big investment banks on Wall Street too.
There are always warnings though…
But honestly, the biggest reason I think we’re finally moving into a recession is that it just feels different right now.
Very scientific, I know…
But let me explain:
For the last few years, it’s seemed like I couldn’t walk two feet without tripping over someone trying to give me money. Not just clients. The government too. Customers as well. Lots of sources.
In the past month or so though, things have been moving a LOT slower…
And sure, Mercury is in Retrograde again…
But I think a huge part of it is because:
High Net Worth individuals have seen a significant portion of that wealth erased in market routes…
And that includes cryptos, many of which are down 50%+ from all time highs.
On top of that…
Government money that was being handed out fast and easily to businesses under the previous administration has slowed down considerably under the Biden Administration.
This isn’t political, just a fact…
For example, my call center is owed something like $1.6MM in ERC Tax Credits…
And while we received those tax credits promptly in the past…
Now they’ve been delayed by over half-a-year, with no timeline for when we’ll receive them.
That stuff matters:
With that extra money we would have bought a building, hired more staff, and made more investments in the local Las Vegas economy (where the call center is based)…
But without it, we’re considering pressing pause on buying the building for the time being.
Now perhaps you say “well fine, your business doesn’t need those credits!”…
And that’s true…
But take our business and now multiply it by half a million businesses…
Or a million more businesses…
All not getting that extra money…
And whether you believe in trickle-down economics on a macro level or not…
This change has an economic impact.
Then of course there’s inflation…
And rising interest rates, which are making banks and others on Wall Street less likely to buy or invest in companies and startups.
There’s also the devastation of China’s total lockdown…
The war in Russia and Ukraine, which threatens the world’s wheat supply and has put a stranglehold on natural gas flows and energy production…
Especially combined with the Biden Administration’s policies that had been so focused on renewables at the expense of domestic energy production (which has directly affected prices at the gas pump)…
And the fact that the global supply chain is a mess in general, with no signs of things easing…
Plus historic labor shortages due to the Great Resignation and some people still being afraid of Covid…
And when you add all of that up…
It appears as though things are coming to a head here, and that things are going to slow down, or even contract, for the next few years. That’s something about recession.
I actually think we already are in a recession and we just don’t have the data proving that yet, because this data is a lag indicator that comes out after the fact.
Okay so anyways, with all of that being said…what do we do?
First, as entrepreneurs we should more-or-less ignore the recession.
I wrote about this back in February/March of 2020, when Covid-19 was first becoming a thing. At that time, there was a fear of global recession…and perhaps a historic one akin to the Great Depression.
So, I started researching the companies that did the best during the Great Depression…
And what I found is that the companies that thrived were the ones who basically pretended the depression didn’t exist.
In other words, they kept on advertising and running their business as usual.
In fact, as one article I read pointed out:
“Both anecdotal and empirical evidence support the case that advertising was the main factor in the growth or downfall of companies during the Great Depression. To put it bluntly, the companies that demonstrated the most growth and that rang up the most sales were those that advertised heavily.”
It’s all pretty fascinating.
During the 1920s, Ford was outselling Chevrolet by 10:1. When the depression hit though, Ford cut back on their advertising budget drastically while Chevrolet doubled down. By 1931 Chevrolet was the #1 car maker in the U.S.
Similarly, in 1920 Camel was the top cigarette in America. By 1929 Lucky Strike has become the #1 brand, and then by 1931 Chesterfield has also overtaken Camel. Their response? A dramatic increase in ad spend that led to Camel regaining their best-seller status by 1935.
And there are numerous other examples of this in the Great Depression…
Because, as that same article I referenced a moment ago goes on to say:
“Because so many companies cut spending during the Great Depression era, advertising budgets were largely eliminated in many industries. Not only did spending decline, but some companies actually dropped out of public sight because of short-sighted decisions made about spending money to keep a high profile. Advertising cutbacks caused many customers to feel abandoned. They associated the brands that cut back on advertising with a lack of staying power. This not only drove customers to more aggressive competitors, but it also caused financial mistrust when it came to making additional investments in the no-longer-visible companies.”
Interesting right?
Well reading about this back in the early spring of 2020…
It led me to the following conclusion, which I shared with my list:
“I’m just going to run all of my businesses as normal, and operate under the assumption that COVID won’t negatively impact them. I’m going to advise all of the members of Copy Accelerator to do the same thing. If I see really strong evidence to the contrary, I’ll adjust at that point.”
That worked out really well for me.
2020 was my best year ever financially to that point.
Then 2021 was 2x better…
But not everyone took this approach.
I was surprised to see many people who I thought were “solid” become super freaked out at the beginning of Covid…
Going so far as to dig themselves into financial holes by hitting “pause” on everything they were doing.
And while most of them did end up snapping out of it…
They lost out on anywhere from 6-18 months of incredible opportunities and profits.
Not me though…
And I’ll be taking this same “business as normal” attitude into this recession as well…
And I’d recommend most of you follow the same path.
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Okay and then the second thing I would consider doing as we enter a recession is to be prepared to make small adjustments.
Be flexible.
In the words of Isaiah Berlin, be a fox and not a hedgehog.
This might seem contradictory to what I just wrote, but it’s not.
The reality is, people have made great fortunes during every recession and depression.
Startups have been launched and then succeeded wildly…
Companies still spend money and so do people.
We shouldn’t act like a recession means there’s a lack of opportunity or use it as an excuse to underperform…
But we may need to adjust.
For example, for freelance copywriters…
Perhaps look at industries that do better in recessions than others.
For me personally, I’ve been looking at doing more work with political campaigns…
I’m talking with a U.S. Senate Candidate’s campaign about doing some Emotional Response Marketing for them “for free”…
And I’ll be doing that because I’m ideologically aligned with that candidate…
But it’s not lost on me that this will be an amazing case study if I want to do more marketing in the world of politics…
And that’s especially true with a recession looming…
Because guess what?
Turns out, political campaigns still spend a TON of money during a recession.
Then there’s the video game sector, which I’m super bullish on in general…
And especially when it comes to Web 3.0 and P2E Gaming.
I’m an advisor on this P2E Gaming project that that just got a great write-up in Venture Beat yesterday (I shared it on my FB Wall Yesterday)…
And you know what’s nice about the gaming sector?
When people have less money…
They’re more likely to stay home and play video games because it’s a “cheaper” source of entertainment than going out to bars or taking vacations.
That’s always true during a recession… That’s something about recession too.
But then with Play-to-Earn…
We’re adding in an element where games are actually paying YOU to play them – in the middle of a recession…
And it’s hard to see how that won’t be very appealing to a lot of the population.
So the point is: diversification is often a good idea.
I’m still doing health supplement stuff as well…
Because people still take supplements during a recession…
But I’m also getting into other industries too so that I’m more diversified…
SEE ALSO : HOW TO CREATE AND WORK WITH CONTENT MARKETING STRATEGY
And if the right opportunity comes up in a total unrelated niche or category…
I’ll get involved there too.
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Alright this is a long post already so I’ll stop here.
But let me know if this is making sense and resonates with you.
Credit : Stefan Paul Georgi