How Great Entrepreneurs Find Ways to Win During Economic Downturns Recessions are an opportunity to recalibrate and make great strides in your business while others are unprepared to brave the challenges. Here's how great entrepreneurs can set themselves up for success despite economic uncertainty.
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A couple of friends and I opened a very expensive business just five months before the pandemic shut down all in-person events in California: A 72,000 sq. foot gym for youth sports, AAU basketball and club volleyball.
We invested seven figures to convert an empty furniture warehouse into a beautiful gym with 12 courts. And just as soon as we got most of the upcoming weekends for 2020 booked out and committed, the pandemic came, and our entire state shut down in-person events and youth sports. It was devastating. It took so much hard work to transform the space into a beautiful gym and get all the commitments and reservations for the upcoming year established, and it appeared to be a pending disaster for us.
The longer the pandemic went on, the worse it looked for our new business. Our beautiful, new gym was empty and silent — a business we'd talked about creating together for nearly a decade. And it was going to disappear right from under us…
Related: Tips on Surviving an Economic Downturn From a Serial Founder
Be creative when times are difficult
There was a moment where we turned despair into hope by jumping on a long Zoom call and deciding we wouldn't get off the call until we had some good ideas to save the business. We talked about virtual sports training, but that didn't seem to be profitable enough to pay the bills. After many hours of discussion, we came up with a creative idea to transform the sports facility into a tutoring center for children of "essential workers." We found an obscure rule in California that would allow for in-person gatherings of students for tutoring and supervision if their parents were essential workers, and the kids would otherwise be left home alone for remote school.
It seemed like a wild idea, but at that point, we were desperate and had to give it a shot. So, we bought a ton of desks and supplies and turned the gym into a place for kids to have some form of schooling and supervision. This pivot helped us serve our community in an amazing way and build a reputation of trust and leadership during a very tough time. And guess what ... it was the key to helping us pay our bills and keep the lights on during a time when other sports businesses were closing their doors!
There's no greater feeling as a founder than going from barely surviving to succeeding and thriving! I'm happy to report that today we are thriving! Our gym is booked every weekend with tournaments and events for the upcoming year, and any night of the week, you can see that it's filled to capacity with kids and teams training and playing sports. The takeaway lesson is that you've got to be creative when times are difficult. As an entrepreneur, you will face great challenges and will be forced to make tough decisions. When your back's against the wall, what will you do? Will you innovate and adapt? Or will you turn off the lights and go home?
You take unusual risks when you start your own business, and at any point in time, you could lose all that you've worked for. Uncertainty is what you signed up for. Recessions are always a threat, and the next unforeseen challenge is often just around the corner. Whether you're brand new or a seasoned business owner, prepare to be tested. You and your team need to stay flexible and open yet committed to serving the clients and customers who need what you offer.
Related: How to Recession-Proof Your Business
Invest in yourself, your marketing and your team's well-being
During tough economic times, businesses typically cut back on spending and resources. However, that might be the exact opposite of what you should be doing. It might be better to invest in yourself, in your marketing and in your team's well-being. Providing adequate resources and support for your team will keep them engaged and productive, which is critical during more uncertain times.
For example, during the beginning of the Covid pandemic, the markets were down, our business revenue was down, and the outlook was very bleak. I called a team meeting to address our game plan and have an open discussion with everyone. They were no doubt concerned about potential pay cuts or layoffs. Instead, I took the opportunity to express my appreciation for their hard work, loyalty and dedication. We agreed to reduce our office working hours to give everyone more time for their families. I also gave them a pay raise, as everyone felt the pain of the pandemic and rising inflation. And we've kept those shortened, family-friendly office hours for three years and counting now!
I used the extra time to write my first book, which reminded me of the importance of investing in ourselves and creating content to benefit those whom we serve. This decision to invest in employees over profits made a significant difference, and we were able to thrive and eventually grow during the downturn. Investing in yourself and your team's well-being will more than pay for itself in the long run. We doubled down on our marketing and branding efforts to differentiate ourselves from competitors and decided to grow instead of hunkering down in survival mode.
If you choose to utilize uncertain economic times to invest in your team and your clients, your relationships will grow that much stronger. You will build a reputation as someone who takes on challenges as a leader. Stay optimistic, make adjustments, be flexible and keep your people's best interests at the core of your decision-making. Loyalty and success will follow as you'll learn that you can weather any storm together.