How To Survive A Recession
It is October 27th, 2022, and the global macroeconomic outlook suggests that a recession is imminent, thus if we're not already in such a situation. Looking at the fact that Europe is facing its worst energy crisis in decades, and developing countries experiencing absurd record-high inflation numbers, it's not difficult to see that the end is nowhere near in sight.
Mind you, all these catastrophes come after years of the crippling COVID-19 pandemic which almost halted the global supply chain and the hospitality industry. It is worth noting that the world and the systems we've built are in turmoil but that does not mean that the world is coming to an end.
We're just in a cycle. At this stage of the cycle, everything is going down, and there's one bad news after the other. We just have to survive to where everything goes up, and there's unending positive news.
While we wait for things to get better, here are three(3) things you can do to survive a global recession so that you will only suffer minimal damages, and also give you an upper hand when the tables turn.
1. Stay Grounded - Do Not Panic
When times are bad, negative news dominates TV screens and the airwaves. The situation gets worse on social media when people are able to respond and spread negative news in real time like wildfires. You'd want to refrain from buying into the negativity because a positive mindset is everything.
If your mindset is negative, your actions will be negative which will eventually produce negative fruits. You have to stay grounded, keep your head above water and stay positive. A wise man once said that weeping tarries for the night, but joy comes in the morning.
2. Start A Business
This might sound counterintuitive but the best time to start a business is during a recession. Why? Because many essential businesses would have closed down reducing the competition and saturation in the market.
Be cautious though, that you'll need ironclad discipline to run a business in a recession because margins will be very tight, and cash flow will be scarce as people hoard money. However, if you're able to see the business through trying times, things will automatically scale and consumers will reward you for your resilience.
3. Diversify Your Interests
Diversification here means to split your income or assets across various asset classes. The goal here is not to be caught holding a single bag at any point in time. In hard times, things are unpredictable so you'd want to make sure that a single tragedy will not deplete a lifelong of hard work.
For example, if you own a restaurant chain, it is prudent to move some income or funds from the hospitality industry to say transportation, real estate, or even gold collectibles. In this scenario, when the hospitality industry collapses as it did during the COVID-19 pandemic, you'd still have other streams of income to fall on.
Going by this principle of diversification will save you a lot of pain and heartache. I previously explained in another post that diversification is one of the main pillars of money management.
To conclude, I will say that hard and trying times are part of life, and no situation is permanent. Seasons come, seasons go, but if you know how to manage your affairs, you will be safe and sound even in the worse of situations. That being said, also know that there's always light at the end of the tunnel, and the sun always shines after the rain.