Challenging economic conditions are cause for many to wonder about just how business can survive. However, those exact challenges can often create considerable opportunity for companies that are prepared to take advantage of the state of affairs. Believe it or not, recessions and depressions often see a number of great companies either expand or become established, and they often have those exact conditions to thank for their success.
While every economic downturn is different, and each company is unique, there do tend to be two general trends that successful companies follow during an economic downturn. These are taking advantage of any structural upper hands that they may possess, or simply adapting to the times in a way that others are unable to recreate.
By capitalizing on structural advantages, companies lean into existing practices in order to create as many benefits for themselves as possible. This can take a variety of shapes. Sometimes, companies are poised to take advantage of shifting customer preferences. During the Covid-19 pandemic in the United States, Sonic Drive-Ins was able to grow substantially faster than other quick service restaurants because its business model factored in social distancing from the start; at the vast majority of locations, customers remained in their cars and had someone bring them their food at arm’s length.
Other times, it was more about having people who could easily switch from one task to another. As cell phones became more common, and landlines became outdated, a number of line service companies switched to servicing high speed internet lines; those that remained focused solely on telephone wires were soon driven out of business.
Signs of the Times
More common is for businesses to thrive as a sign of the times. This means taking account of what exists in the particular place and time, and making sure that the business is structured in such a way that it is permitted to make the most of those advantages. Again, the 2020 pandemic offers a number of examples of this. Amazon and Netflix are just two of the companies that were able to see their bottom lines increase dramatically as people shifted to staying home, ordering more online as opposed to shopping in brick and mortar stores, and streaming their entertainment rather than watching sports. Of course, it isn’t only large companies that have seen success; innovation has lead to ongoing success for Netlinkz, an Australian company that helps companies build networks that largely stay out of the way.
While downturns may slow the entire economy, opportunities will always exist for companies that are able to see through the smoke and realize that providing essential goods and services, often while capitalizing on existing attributes, is always a profitable proposition. These companies are often leaner, more innovative, and more customer-centric, meaning that they are better prepared for anything that comes their way.