Recession incoming: why this one will be different
Recession incoming: Why this one will be different
A dark shadow looms on the economic horizon. Businesses everywhere are feeling an ominous chill in the air. We’ve all been watching inflation rising and rising as the cost-of-living crisis threatens to overwhelm the whole country.
The incoming recession seems inevitable. It is already being felt around the world as trading conditions deteriorate while both interest rates and fuel costs surge upward. This is no common or garden economic downturn, but a headlong dive into a fiscal crisis that could define a generation.
Navigating the coming months is going to be a challenge for everyone, and businesses will need to prepare and ensure they are sufficiently resilient to survive. To achieve such resilience, it is important to understand why this recession will be different from the last, and what can be done to not only survive but to keep growing your business while all else is in decline.
Why this recession will be different
The last recession was in 2020 and is the shortest on record, lasting only three months. While a repeat of that timeframe could be navigated by most businesses, the coming recession is unlikely to be so brief this time around. 2020 was an entirely pandemic-induced recession which was always going to subside once we got to grips with the ‘new normal’.
Prior to this, Britain faced a recession in 2009, following the global financial crash that began with the subprime mortgage crisis in 2008. During that recession, GDP fell in the UK by 7.2% and the recession did not end until the last quarter of 2009.
Non-pandemic induced recessions last around 11 months on average. Warnings of the incoming recession seem more complex. There are multiple causes, with the main catalyst being inflation which has recently reached a 40-year high both in the UK and the USA.
At 9.1% during June, the UK now has the highest inflation rate out of all the G7 countries, with the Bank of England predicting it will reach 11% later in the year.
Food price inflation is also at its highest since 2009, interest rates are increasing, and rising fuel costs are vastly accelerating the inflationary spikes. The stock market remains precarious for investors due to drops in values across the markets, with the S&P 500 already sliding into a bear market. Cryptocurrencies have crashed through the floor.
Add this to the ongoing pandemic problems such as the continued supply chain issues which have affected trade and production all over the globe. It is clear that this incoming recession is going to hit a lot harder and last much longer than the last one.
How Britain’s businesses are coping so far
Businesses are already battling adverse trading conditions that are causing reduced revenues, while simultaneously navigating unparalleled increases across every major cost on the balance sheet. Materials cost more, labour costs are rising, the cost of facilities is a major drain on resources, and the price of bail-out capital is increasing monthly with every rate change.
Britain’s largely imported energy bills and ongoing Brexit-related friction are compounding the problem. Trade ties with the European Union may continue to be hurt, while the persistently high inflation and seemingly unavoidable recession are already giving foreign investors pause.
While the economic outlook remains unclear, and with no real idea as to how long inflation will continue rising, it is only going to get more difficult to make sound fiscal and monetary policy judgements. It seems vital therefore that businesses in all industries sufficiently prepare before a recession arrives in earnest.
Industries most affected by the recession
It looks likely that many sectors will be hugely affected by the recession, but some always fair worse than others.
The food service industry typically takes a big hit during a recession. Many bars and restaurants have either closed completely or laid off a lot of workers to survive a severe economic downturn.
Retail also suffers as spending is curbed by the general population, as does the leisure and hospitality sector. Businesses will have to do everything they can, from increased marketing to hospitality management courses, to survive.
Start-ups from any industry are particularly vulnerable to a recession, as it can halt their growth and prevent them from establishing themselves.
New small businesses often lack the financial resiliency to survive an extended recession, even one of average length. As spending is restricted, so is the ability to hire the right talent to keep growing. This obviously makes scaling up practically impossible, although there is an alternative that can keep small to medium-sized businesses on an upward trend even through a recession.
Prospecting to grow during a recession
Businesses grow by attracting more clients than they lose, and this is no different during a recession. The issue is the increased difficulty in attracting new customers when prospects are restricting their own spending due to the recession. The solution can be found in the form of prospecting.
Email prospecting is a low-cost and high-return sales and marketing channel which offers businesses detailed and up-to-the-minute market visibility around the world. It provides a business with access to decision-makers they would otherwise struggle to reach.
Partnering with an outreach agency, using their powerful communications software to deliver personalised messages directly to prospects generates far greater cut-through than small to medium-sized businesses can achieve on their own.
It is a great idea for any ambitious business during the best of times, and nigh-on essential during economic downturns. The benefit is not just a reliable, high-quality lead flow creates new customers. The added benefit of a prospecting partner is it allows your sales team to focus on what they are actually good at: converting those leads.
Email prospecting enables enterprise B2B organisations to maximise the productivity of their sales teams. And for B2B organisations without dedicated sales teams, the benefit is arguably greater, with a steady stream of sales conversations landing in your inbox.
Joining forces with a prospecting partner now can start generating recession-proof growth, regardless of what that dark shadow has in store for the rest of the economy.