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7 Ways to Make Your Non-Essential Business Recession-Proof



October 26, 2020 9 min read

Opinions expressed by Entrepreneur contributors are their own.

There are many unpleasant scenarios entrepreneurs plan for in advance, in an effort to stay afloat if and when trouble hits. These scenarios include losing major clients, lawsuits, and the aftermath of natural disasters. , however, are a league of their own. They are difficult to plan for in advance, and damage control efforts are akin to fighting an uphill battle. 

In the post-pandemic world, staying afloat has proven to be a greater challenge for businesses in non-essential industries such retail, automotives, and hospitality- which in too many cases ended up putting down the shutters. But is there a way for entrepreneurs behind non-essential businesses to make it out of such mayhem in one piece? In a perfect world, the answer would be “yes.” In reality, it all depends on how much the entrepreneur (and their team) is ready, willing, and able to adapt for the sake of company longevity.

Related: 9 Smart Ways to Recession-Proof Your Business (Fast)

I reached out to seven entrepreneurs behind an assortment of industries, to gain a better understanding of how they navigated their way towards making their respective businesses recession-proof. Here’s what they had to say.

Make necessary adjustments to position your business for success 

As an entrepreneur, you have the choice to make any and all possible adjustments needed to avoid pitfalls and leverage opportunities that are unique to your industry amid a recession. According to Billy Draddy, the CEO of men’s apparel company B. Draddy and creative director of Summit Golf Brands, it is ideal for adjustments to be made before the dark cloud casts its shadow. It is also important to remember that the implementation of each change calls for more than just a quick announcement. It is a team effort. 

“A week into quarantining during the pandemic it was clear that we were going to need to adapt to the current business environment in order to survive,” says Draddy. “We needed to be innovative, and motivate our team to execute on practices that were completely unfamiliar, under the pretense that we would all be better on the other side of this- which we thankfully are.”

Experiment with temporary pivots

Depending on the nature of your business, you may have no other choice but to make a slight pivot, even if it’s a temporary one. 

Despite the implication, such a move is not limited to larger companies, as seen in the case of the popular Tel Aviv-based American , Bodega. Soon after lockdown restrictions were imposed in the area due to the pandemic, the dine-in/take-out restaurant branched out to offer meal kits for delivery, which tremendously helped the business weather the storm, despite reduced foot traffic. “These kits are the key ingredient to making the lockdown a little more bearable,” says co-owner James Oppenheim. “The community can still enjoy decadent comfort food delivered right to their door!”

Related: 7 Reasons Legal Cannabis Is a Recession-Proof Industry

The Chicago-based Milt’s Barbecue for the Perplexed chose to take the route of expanding their menu to offer more than just BBQ, and made arrangements to deliver food/catering packages to neighboring cities. They also ran creative promotions selling limited-edition infused bourbon, which quickly sold out despite the recession. Bryan Gryka, the executive chef and general manager of Milt’s, also went onto to pay it forward, by collaborating with soup kitchens and helping families in need, all out of goodwill in one of the cities hit hardest by the pandemic.

Consider creative ways to build new streams of income

Creating multiple revenue streams is one of the best ways to recession-proof your business. It’s even better to offer packages with a wide range of price points if possible, to at least offer a little something for everyone. Recessions are not the time to hold onto pride, because at the end of the day, some profit is better than no profit, and it collectively makes a huge difference.

Solopreneurs, whether they are freelancers, creators, thought leaders, or agents, have the benefit of instantly implementing any creative new idea that comes to mind for new or additional revenue.

“The event industry is down – but definitely not out,” says Adena Mark Kapon, the CEO and founder of A to Z Events Israel. “It’s important to devise additional streams of income. For me, that means organizing large-scale projects that utilize my experience on the ground, for online experiences. For others, it can mean consulting or training business within the industry. We all have to use this unique time wisely to ramp up and sharpen our online presence, making virtual appointments, tours, and conversations easy, since this entire situation has made that more critical than ever.”

Place great care into customer retention

Finances tend to be more/less tight for entrepreneurs on a normal day, and even more so during a recession. At that point, it becomes difficult to invest large amounts of money to attract new potential clients. That does not mean hope is lost. Instead, they can focus on their existing client base. 

Customer retention is highly recommended for B2B companies, as practiced by agricultural technology platform and service, SeeTree. “The tendency of customers and funds to spend money on is hampered during times of stress and severe uncertainty,” says Israel Talpaz, the CEO and co-founder of SeeTree. “In light of the difficulties brought on by the pandemic and , we decided to focus on ensuring the quality of our service and on customer retention. We understood that if we can provide great quality during these difficult times, it will be strongly valued, and word-of-mouth recommendations would be more impactful. We also decided to use the time to conduct major R&D efforts to enable readiness for scale.”

Practice great ethics while cutting costs

While most industries suffer major financial blows during recessions, there are some that get hit far worse than others, forcing executive teams to make a series of cost cutting measures. In doing so, it’s crucial to be as ethical as possible, without burning bridges. 

If you’re going to cut ties with agencies and service providers, do so with tact, to make it easier to circle back with them once the smoke clears. If you have to let go of employees, you need to do so with increased sensitivity towards how this would impact them and their livelihoods in the worst of times.

Related: Recession-Proof Your Career With These 3 Skills

“The travel industry was hit first and worst, and likely will recover last,” says Chaikel Kaufman, the founding partner at Chaikel Travel. In an article that addresses the hardships he faced as the pandemic and recession began to unfold, Kaufman stated the difficulty he faced while handling furloughs, which he still carried out in an ethical manner with individual phone calls. “To my surprise, my employees’ responses were very positive. They understood the situation. Many went as far as to volunteer their time at no charge. ‘I’m stuck at home with nothing to do. I’d be happy to help out just to keep my sanity,’ one employee told me.” As time went on and it became clear that the after-effects of the pandemic was going to last longer than expected, Kaufman reluctantly had to take the next step, but made sure to still do so in an ethical manner. “I made the very difficult decision of who was still needed for us to operate in a limited capacity… and spent two days researching the proper way to let an employee know they were being laid off, and made the calls.”

Go digital anywhere and everywhere possible

The rapid digitization of processes turned out to be one of the few good things that came out of the pandemic and recession. While there may be a few costs upfront- the time, resources, and sanity that gets saved from it is priceless. 

“The 2020 recession sent many businesses into a scramble,” says Elizabeth Sheils, the founder of event payment and contract platform Rock Paper Coin. “It placed event organizers and vendors in the position to figure out how to stay afloat, move to virtual appointments/tours, consults, and digitize their contracts and payments, (with the latter working out for us.) Most industries traditionally thrive on being ‘in person.’ Many businesses that underwent varying levels of digitization ended up experiencing a steep learning curve, the efforts of which were ultimately worth it.”

Figure out ways to create value against all odds

One of the simplest-yet-effective ways for entrepreneurs to make their business recession-proof is to focus on ways to enhance core competencies.

“Like many other startups, Obligo was facing both threats and opportunities due to COVID,” says Omri Dor, the COO and co-founder of fintech company Obligo. On one hand, as a fintech company, extending credit became riskier. On the other hand, demand for our product skyrocketed. Our first response was to tap the brakes. We increased our underwriting thresholds, dropped our marketing budget and temporarily cut our salaries to maximize runway. To shift gears, we doubled down on our data science and collection automation technology, until we were sure our KPIs allow us to grow safely. After about 14 days of all-hands-on-deck, as we felt more traction on the curve, we started pushing the gas pedal again. It may sound clichè, but the only ‘recession proof’ strategy is to create real value.”

There isn’t a single move, or moves, that can guarantee to make any business 100% recession-proof. However, the implementation of the measures mentioned here can help dramatically increase the odds of your business staying afloat during a recession, and possibly even make a sizable profit.


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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