Economic shocks: An entrepreneur’s guide to survival
As any entrepreneur will tell you, entrepreneurship doesn’t come without its challenges. Global events like financial crashes, pandemics, cost of living crises and political upheavals can push any business to the brink, with business owners of all experiences and from all walks of life feeling the effects.
The 2008 financial crash, the Covid-19 pandemic, the ongoing cost of living crisis right here in the UK, and the economic instability caused by political decisions (like Liz Truss’ unfunded tax cuts) all serve as stark reminders of the volatility entrepreneurs face. These external forces are out of our control but with the right preparations, a bit of adaptability and a positively proactive mindset, you can be better prepared to try and navigate the impact of these global shocks.
Be adaptable
One of the most critical traits an entrepreneur can have is adaptability. When the financial crash of 2008 hit, businesses that pivoted quickly were the ones that survived. Whether that meant diversifying their offerings, cutting costs or finding new markets, flexible business models that moved with the times (no matter how uncertain) weathered the storm and emerged the other side with an advantage.
Similarly, during the Covid-19 pandemic, companies that embraced digital transformation and remote working thrived while others struggled. By April 2020, 46.6% of employees did at least part of their job from home, with 86% of those doing so specifically because of the pandemic according to this research.
Build a buffer
A carefully prepared financial cushion offers individuals and entrepreneurs a lifeline when things turn sour. Having a strong financial buffer could after all mean the difference between surviving a crisis or closing your business’ doors for good.
The sudden impact of the pandemic, coupled with the uncertainty caused by political decisions, highlights the importance of maintaining healthy cash reserves. Entrepreneurs should always ensure they have enough capital to weather prolonged downturns.
Stay informed
Economic and political decisions can have far-reaching consequences. While we might not always get a heads up, taking a proactive role and keeping your ear to the ground can give you a head start.
Entrepreneurs need to stay informed about global events so they can act quickly. The 2022 UK mini-budget, which proposed unfunded tax cuts, triggered market turmoil and serves as a lesson for entrepreneurs to anticipate and prepare for economic shifts that could affect business.
Maintain focus
The customer should be your focus, so why should that change during an economic shock? While customer needs are certain to change, it is how you respond to them as an entrepreneur that matters.
Entrepreneurs who listen to their customers, and adjust their products or services accordingly, can find new opportunities even in the midst of adversity. Whether it’s offering more affordable options during a cost of living crisis or prioritising essential services during a pandemic, understanding and meeting evolving customer demands is crucial.
Stay tech-savvy
Technology can be a real lifesaver for struggling businesses and fraught entrepreneurs. The use of technology has the ability to help you remain agile and build resilience as the Covid-19 pandemic proved. During the pandemic, businesses that embraced ecommerce, online services and automation were better positioned to survive, adapt quickly to changing circumstances, and continue operations despite disruptions.
Global events and economic shocks may be beyond our control, but your response to them isn’t. By being adaptable, financially prepared, informed, customer-focused and tech-driven, entrepreneurs like you can not only survive but emerge even stronger.
