Flat is the new up!

recession flat is the new up

Because the US economy has been in a recession for a full year now, companies have been going out of business. For the ones that aren’t going out of business, they are likely to loose much of their anticipated revenue. So what does this mean for you?

Whether you believe it or not, the recession is hurting your income. You may claim your company is recession proof, but that is a bunch of bullshit. Doctors, lawyers, teachers, and even Internet gurus are all losing money (or are going to if they haven’t yet). For example with less people employed, the number of people who have health insurance decrease, which means less people are going to visit the doctor when they are sick.

In the Internet world many companies haven’t seen the recession hit them yet, but the reality is, it has already hit them. For example Jeremy Schoemaker wrote a blog post saying that the recession hasn’t hit his company yet. Even if we go into an economic depression, Jeremy will probably still make tons of money because he is a talented marketer. Although people like Jeremy are still making a lot of money, if we weren’t in an economic recession they would probably be making more money, which means the recession has hit them.

So if you think recession hasn’t hit you, think again. If your company isn’t losing money and your growth is flat, consider it a good thing. In this economy, flat growth is considered the new up.

What do you think?

P.S. If your business is stagnant and you’re looking for a lift click here.

Comments

  1. Matt | Small Biz Bee :

    Funny you bring this up. I was recently thinking that I am still making good money from a variety of income sources so things must not be that bad…then id dawned on me that if the economy was better, I’d be making even more money! After that I felt cheated =)

    Matt

  2. Success right now is weathering the storm, for most companies. Aim for keeping afloat and then focus on steadily making headway as things turn around over the next two years.

    A company can claim to be recession-proof, but consumers are not. Therefore 99% of companies are going to be hurt one way or another. Like Alan Greenspan said, the froth is going to slowly dissipate and irrational exuberance will hopefully become part of our history that we will want to forget.

    Now is also a good time to work on internal company growth and take advantage of some of the tips you’ve been posting here for quick sprouting business.

  3. Down economies are great time to start businesses and grow them. Like running up hill, it only makes one stronger and more able to compete. It makes businesses trim fat, worker harder, look into new markets, and removes the competition. When the economy rebounds (everything is cyclical) these businesses will be well position to skyrocket while everyone else is just playing catch-up.

    • ATLANTA WEDDING PHOTOGRAPHER :

      This is the exact topic (in principle) that gladwell was making in his book “OUTLIERS.” Why are some people, communities, cultures more successful than other. Shoe money may not make as much money BUT HE HAS THE CAPITAL to weather the storm because he prepared for it.

      If i have a million dollars in my pocket the recession may not affect me in that I am about to loose my home but that I can go about life as I would like to.

      Recession is about perspective and preparation. If you don’t have any debt and responsible to only purchase what you could afford then what is the recession to you?

    • You are right. It is easier to find business partners during this time and within 5 years the economy will be up.

      • Hi Neil. Would mind elaborating a little more on how so the economy will be up, in 5 years? Now THAT would be a proper comment.

  4. Recessions affect everyone, it’s like the falling tide… that thing no one likes to talk about, that lowers all ships. πŸ™‚

    There are companies that are less affected by recessions, doctors being one of them. Ultimately, the sick will still need care or they die, money is less important than life; but you’re right, doctors will see less of the routine, “i have a cough” type scenarios.

    • Yea, everyone hates talking about it. We have been in recession for a full year now and 6 months ago very few people were talking about it.

    • Some doctors I know, say that patients are choosing to postpone surgeries, obviously none like heart surgeries, but like hip replacements and stuff because people think they need to stay active in the workforce otherwise they will end up having a tougher time to pay bills, once they are done with the surgery and need to rest.

      • For some things like hip replacements, people should probably get them done. But when you have a cold, there is no need to see a doctor in the first place.

        I guess if you don’t have money, you don’t have too many options.

  5. Matt Coddington :

    I still think us online earners are going to have it better (maybe still not *great*) than everyone else. Why do I think this?

    There are still a lot of people/companies out there with cash looking to invest. Where do they invest right now?

    Stock market? lawl
    Real estate? lawl
    Advertising? maybe
    Internet? hellz yes

    I’ve seen more money the last couple months than ever.

    • We do have it better, but I rather have it “great”.

      I think a lot of us are getting effected, it is just that most of those people aren’t talking about it.

  6. I think any growth in this economy is good.

    On the other hand, some companies may have been over-cutting jobs as a safer way to weather the storm.

  7. You’re right, I think it does hit everyone, just in different ways.
    If some of these public companies had been run correctly in the first place, they could be snapping up all the undervalued competitors right now instead of laying off the workforce they never should have hired.
    This is mngt 101 – there will be good times and bad times – don’t overbuild/expand during good and you won’t have all these charges and layoffs during bad – growth doesn’t last forever.

    • Mark,

      A perfect example of poorly managed companies would be GM, Chrysler and Ford. All the other car manufacturers seem to be surviving, but not these guys. Why?! Because the CEOs and executives receive ridiculous compensation, while the “real” workers are slaving.

      The automakers union is a big part of the problem as well. Under contract, these automakers are required to pay a severance pay of $105K if any employee is let go. Also, assembly line workers get paid regardless of whether they work or not. In what other industry can you think of workers getting paid even though they don’t work?

      • I wasn’t going to name names, but you hit the nail on the head there.
        If the “Plan” they submitted to Congress is so awesome, why aren’t they implementing the darn thing NOW – or last year? Somehow each of them were able to create plans in like a week or two that would save their companies and magically reverse years of mismanagement.
        Creating these plans was extremely hard until tens of billions were on the table, then it was soooo easy.

        • They’re simply too proud to admit they’re wrong. When you sit in an ivory tower, it’s difficult to see what happening on the ground. The interesting part of all this is how we are repeating the same thing we did in the 70s, the last time we had an oil crisis. With so many “foreign” cars being made here in the US, I think there is no need for three mismanaged car firms who have no strategic vision.

        • I think the Congress shouldn’t bail out some of those companies. In some cases we *may* be better off without them.

      • But I think that is with most CEOs, it seems that they all receive great compensation.

        I think it is more that they are set in an old mentality and they aren’t changing with the times.

    • The problem is that when times are good, people tend to forget that.

  8. StartBreakingFree.com :

    Hi Neil,

    While you are probably right in an intellectual sense – I find that it isn’t very helpful to think this way even if it’s true!

    Call it positive thinking or whatever, but this is one of those cases where I think it makes sense to be a little delusional and assume everything is gonna be ok. After all, that’s the only way us entrepreneurs are going to get out of bed in the morning, make something great, and bring us out of the recession.

    So anyway – I don’t really believe in this recession. I look at it as a healthy cleansing of the bullshit companies from our economy. The strong ones will only get stronger. People will get over their fear in 6 months and we’ll be kickin ass and takin names in no time πŸ™‚

    That fake movie poster is hilarious though!
    Brian

    • Brian,

      Good point. Yeah, let’s weed out these BS companies and let the good ones get stronger. And, in the process there should emerge more smaller businesses since there would be less overall competition.

      • The great thing about this economic situation is that there is now opportunities to start companies like a bank, while there wasn’t an option to do that before. If you start a bank right now, you will be better off than all of the other banks.

        • You don’t even need to start a bank. Just buy a bank that is deep in trouble. There are lots of opportunities to take over businesses in trouble…the way I think of it is…”your pain, my gain” πŸ˜‰

          • If you buy a bank, you have to take over their debt from my understanding.

            There maybe ways around this… many of them are in debt for over 1 billion dollars.

    • Being delusional is what caused many companies to go bankrupt. I think people need to face the reality.

      • Definitely agree, Even in a good economy, I look at the negative aspects…which usually turns out better for me because I am covered for more than I need, leading me to have extra capital.

        • Exactly. If you think that you are “OK” you may spend too much money and put yourself in a bad situation that could have been avoided.

    • I’m in agreement with this sentiment. The less competent companies are finally going out of business, which is good in the long run. Not to say there aren’t casualties among some fairly decent ones.

      Anyway, I’m just getting started, so there’s no “down” for me to go. I might as well shoot for the top.

      • The only thing to watch out for is the retirement plans of the people who worked at these companies for years. It would suck if they wouldn’t have that money when they retire. (or at least I think they lose it if a company goes under)

  9. luckily I am in the business of energy, its needed no matter how bad the economy is, electric rates are still increasing and governments are giving rebates and tax credits if you buy our goods. I am talking to a customer today who is liquidating her mutual funds to reinvest the money into a solar power system for her home!as the stock market continues to fall, people are looking for “safer” investments and more people are learning about the incentives and security of an investment in solar power. Entrepreneur Magazine states that clean energy is going to be a “hot trend to follow in 2009”, so even with the economy headed south, I think we’re in the right place at the right time.

    We continue to gain traction in a down economy, although there are some negatives of the recession. Some of my customers who are businesses that want to resell our products are having a hard time obtaining financing from their banks, and this is delaying some larger projects from being funded, which means it takes us longer to realize renevue from a customer that can’t get their financing together in this down market.

    I agree with you Neil, the recession is hurting my income. I would have much more business closed if the credit markets opened up!

    • But in a bad economy, less people are employed. This means that many home owners will not be able to buy solar panels.

      None-the-less, best of luck with your business.

      • That is true, less people are employed, that can’t help the economy although did you check out the numbers released by retailers for Black Friday and Cyber Monday? Retail numbers still had a growth rate compared to historical shopping seasons.

        Before the holiday shopping season began I saw the media reporting this was going to be the worse shopping season ever, but it turned out consumers spent even more this year. Can anyone explain the disconnect between the bad economy and increased consumer spending?

        • I did, but I think that has to do with prices being really low. With the economy this bad I think people bought stuff now even if they needed it 6 months from now because of low cost. Within the next 6 months retail spending will probably be drastically lower.

          • The reports said…People spent more than last year, but profits were low-none. Which basically means everything was really on “sale” but no company made anything…usually on Black Friday this is not the case.

            I would agree that people are really purchasing what they really “need” as well.

            No doubt- retailers will be lagging to meet holiday sales expectations.

  10. The key is survival. Whoever survives in this game, will be the winners.

    This is why: Businesses are closing up left and right in all industries. When the economy recovers, there will be less competition all across the board…some industries might have a lot of competition wiped out or some may have little, but there will still be less.

    Chances are if your business survives these times, you will end up ahead in the future.

    Also- Just about everyone I know neighbors, friends, etc. – in all aspects – doctors, business people, etc. are definitely agreeing that the economy has effected them in many ways. Some didn’t want to admit it previously, but now they are publicly acknowledging it.

    • But when the economy is up, more companies will emerge. This will cause more competition.

      • Yeah, but if you provide continuous quality products or services throughout the downturn and while more companies emerge during a better economy, it will be difficult for them to “steal” your customers.

        I do agree that more companies will form though causing competition, but like I said, quality is key…in addition to be competitiveness with pricing and such.

        • I would say this economy creates opportunities for small, lean, agile companies to eat up market share if they can service the customer exceptionally, as Romil stated.I know my bigger competitors with lots of overhead are feeling squeezed in this economy. While bigger companies are focusing to stay alive, smaller companies can dedicate more time to the customer.

          • Exactly. Big companies have tons of cost and corporate layers, while the smaller ones can be scrappy. This allows them to be more agile.

        • But for big companies it is hard to provide quality products or services due to their corporate structure. And when employees are worried about losing their jobs, it gets even worse.

          • It will be hard for big companies to sustain the damages because of what you said with lack of employee morale and such, but with smaller companies it’s more manageable. Usually with small businesses the owners keep a close eye on costs and employees in general.

            My main point is that there are opportunities for the small to grow and flourish if the proper steps are taken.

  11. My 2 cents: yes times are tough…even being the first or second biggest doesn’t help…i.e Circuit City, Mervyns, Tribune, the list goes on…

    Just a though I learned from Robert Kiyosaki, “More Millionaires are made in times of depression, than in any other time.”

    So what does that tell you? What it means is that perception is key. Stop looking at the negative and focus on how you can make money. Take advantage of the rough economic times…If you won’t I sure as hell will πŸ˜‰

    Great post NP

    • Good point. We should all start focusing on the positive and move forward. If we don’t, we will probably miss the boat.

  12. Neil,

    I agree with you and I really like the way you put it “flat growth is considered the new up’ I think a lot companies especially big ones and small one like scramble for ways to cut costs and make profit in doing so sometimes they lose there best talent, there branding, innovation, creativity and ultimately there positioning in there market. This makes me think maybe if companies focus on staying flat maybe they can keep there branding, innovation, creativity and ultimately grow there positioning.

    • Plus when companies are making cuts in spending, some are bad choices. In many cases spending $1,000,000 a month in advertising is causing an increase in profit for the company, but executives just look at it as a $1,000,000 line item.

  13. I agree with you. I will hit everyone on this planet.

  14. Flat is always flat. That’s why companies are closing down. We will get to “the new up” when once the we are out of this “flat period” πŸ™‚

  15. On the positive side, I have heard a statistic that on average once a recession is officially accepted as occurring, the average duration from that point has been 6 months.

    • Hopefully we are out of it by the middle of the year, but sadly I think it may take a bit longer for this recession to end.

  16. I think it will take longer than the middle of the year, but hopefully we’ll all rebound by next Christmas season

    • Either way, if you can survive this recession, you will be in good shape in the future.

      • This recession is creating a lot of opportunities for the savvy entrepreneur (where and how is not for me to say). But IMO it is a great time to enter the business market.

        • It is the best time. During a recession you can find good opportunities and good business partners to work with. A lot of talented people are out of jobs.

  17. Custom Silicone Bracelets :

    Well staying flat is better than decaying so you make a good point. I as well think that this recession will affect all most everyone. However is this recession just in our heads because no one can really give or get a clear answer when the question “How bad is this recession?” is asked. I feel that it is just hysteria that spread from recent events in the business world, (scandals) and the global world (wars). So people are just scared to invest in anything because they are not sure what is coming, is the market is going to bomb or is it going to get bombed.

    Thanks
    Custom Silicone Bracelets

    • It is probably the worst recession we have been in. Now granted it isn’t as bad as a depression, but I think we are close into going into a depression.

  18. What you say is one hundred percent true. The effect is not only restricted to the USA and will affect all businesses all over the world. Some more, some less. The intensity is likely to vary depending on the staying power of the businesses and the fields in which they operate. I however believe that it shall pass. Not perhaps in 2009 but by mid 2010 things should start improving rapidly.

  19. Articles Spinning :

    That’s a VERY important point you have made. Yes, the recession is surely affecting everyone because they would have been making much more money than they are making now, if not for the recession. In times like this, the one solution is to keep doing MORE. Like you said in one of your other posts, keep selling! The more you can sell, the less affected you will be by the recession.

    • If you can survive during this recession, you will do very well when we get out of it. Just keep on chugging away.

  20. Motorcycles for sale :

    I thnk the gr8 thing about this economic situation is that there are now opportunities to start companies,
    while there wasn’t an option to do that before.

    • Plus it is easier to find good business partners during a recession. A lot of talented people are unemployed right now.

  21. recession is just the opportunity for one to take opportunities others are losing, it is THE time to work harder towards your goals πŸ˜€

    • As I have been saying for a few months now, “your misfortune is my fortune”.

    • I think its also a great time to re-evaluate your career status and goals. I look at my co-workers and see a lot of people with absolutely no outlet outside of their current job. None of them are pursuing school, and everyday I hear them talking about how if they lose their job, they aren’t going to be able to overcome. Many of them haven’t saved though, and are not motivated to move beyond their current position. Rather than focus on how tough things are, I’ve been looking towards the future and taking opportunities (you’re definitely right on that one) in order to secure a much more stable life. It also helps that I’m frugal and have saved quite a nice emergency fund.

      • You should every year. You don’t want to stay at the same place for 10 years. Sometimes you can do much better if you move around.

  22. I read a post on LAtimes last week and was really shocked.I think it will take longer than the middle of the year, but hopefully we’ll all rebound by next Christmas season. Fingers crossed.

    • Things are looking better. The market was up 400 plus points today.

      • They are looking better, but I really think that we can’t pass judgment based on the market, because we’re still in a rut, and while certain legislation might cause the market to have a quick jump, I don’t think its sustainable at this point. It’s great for quick money though…

  23. Neil, you’re right on the money with this one. I wish I had read this sooner. Around December-January, I was saying how the recession really hadn’t hit my business yet. Then BAM, February 1st came and since then we’ve been dead. The store at which I work has been a ghost-town. Thankfully I’m going to graduate school so I’m not relying on my current profession (err job). It’s been tragic though. The company wants us doing big numbers and we’re not even hitting 50%, which means no commission check and thus a HUGE cut in take home pay. It’s weird, I had my best month in January, and my worst month in February. It goes to show how this recession is still going strong.

  24. cash-loans-uk :

    So true Neil.. recession is actually everywhere.. even if your company is not hit, you are probably being paid less because other companies in competition are paying less..

  25. Online Colleges :

    I think now is the best time to trim the fat and try to tighten up your spending. Even if you haven’t been hit yet, you still may. If you are able to lower your spending now and possible save a little. When and if you do get hit, the blow may not be as hard to deal with.

  26. The Work At Home Blog :

    That’s why making streams of income instead of just one is really important online, and offline if you can. Online is better because you can determine how much you make, but just like you said even the gurus are getting hit. So it pays to have a good amount of experience to make it through online.

  27. Lean Cuisine Coupons :

    Lol..I dunno the effect of recession on incomes..I started earning very recently after the beginning of recession.
    And I guess that we can get out job done by outsourcing for very low cost in this period..Am I right ?

  28. The recession just forces you to think out of the box more, to hunt down better niches.

    In this climate you can’t just expect your online income to be stable and have to keep working at it.

  29. I think any growth in this economy is good.

  30. a friend used to say recession afected everyone, the rich wouldt see it so clear in the begining if they were not paying atention, but it hits every one

    • Not necesesarily… think about this. The iPad had how many sales???? Hundreds of thousands if not more! Look how many people are out there purchasing $600+ gadgets… recession is a mindset.

  31. Halloween Costumes :

    Is the economy still struggling to survive right now?

    • The economy may not be in the best shape, but it comes down to what you are able to do… so don’t let that stop you.

  32. As Neil says in one of the comments, recession is a mindset. Everyone in the UK is talking gloom and doom at the moment about goverment cutbacks, job losses, global recession etc. and yet in the week before Christmas you could barely move in the main shopping areas, they were so crowded with people carrying bags of consumer goods.

    That isn’t to say there aren’t major problems at the moment, just that there is often a silver lining to be found by the entrepreneur.

  33. After all, thatÒ€ℒs the only way us entrepreneurs are going to get out of bed in the morning, make something great, and bring us out of the recession.

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