BUILDING RESILIENCE AND ADAPTABILITY IN AN ECONOMIC DOWNTURN

An economic downturn is the general slowdown in economic activity over a sustained period of time. A downturn also includes that period just before a recession – with a fall in the rate of economic growth and a widening output gap. It can happen in a specific region or on a global scale.

An economic downturn is part of the economic cycle, i.e., the natural fluctuation of the economy between periods of growth and contraction. We sometimes refer to the economic cycle as the trade cycle or business cycle. The main features of an economic downturn include rising unemployment, falling share and house prices, low consumer confidence and declining investment.

In 2020, Nigeria experienced an economic downturn when its economy shrank by 1.8%, its deepest decline since 1983. This was due to the COVID-19 crisis. The crisis caused disruptions in businesses, especially small businesses. Till today, many businesses are yet to recover from this. For this reason, there’s the need to build resilience and adaptability for your business to not only survive, but also thrive in the present economy.

Building resilience and adaptability is not exclusive to business owners/employers alone. It involves everyone. For example, many people have experienced pay cuts or lost their jobs due to the economic downturn. They also need to be adaptable and resilient to overcome these tough times.

Resilience is the capacity to recover quickly from unexpected or difficult circumstances. Resilience gives you the ability to bounce forward with new insights and learning you can carry into the future. Adaptability is being willing and able to adjust to changing conditions. This involves two elements: (i.) being able to notice change, and (ii.) being able to find new approaches and alternatives to respond to this change.

So, how can you build resilience and adaptability in an economic downturn? These are highlighted below:

?FOR BUSINESSES

1. Assess business performance

The first step of assessing your business performance is to review your business plan, including financial statements, to understand what is happening within your business. Reviewing and updating your business plan will help you respond to the risks of an economic downturn.

Regularly assessing your business performance protects your business against any financial or organizational problems. It helps you identify areas that need to be improved before they become major issues, as well as giving you the opportunity to consider how to respond. It is essential to constantly track and review your business goals and performance to remain competitive.

2. Financial management

In most cases, businesses exposed to the impacts of an economic downturn will first experience changes in their trading activity, which will affect their sales figures and revenue. This may be partly because of lower consumer confidence due to restricted access to consumer credit, and job instability including higher unemployment. In turn, this decline in revenue will impact on the financial position of the business in a number of ways, including profitability and cash flow. To overcome this, continually monitor the economic environment and understand how any changes may affect you. This will give you the information you need to plan whether to address financial risks and seize certain opportunities.

Managing your cash flow helps keep your business financially stable. A profitable business can still fail because of a shortage of cash, so managing your cash is important.

3. Recruit employees with a knack for innovation

The success of your business can not be guaranteed without the creativity and innovation of your employees. In order to not only stay alive during an economic downturn, but also to gain a competitive edge in the market, hiring employees who are forward-thinking, progressive and share the values and vision for your business is essential.

4. Make customers a priority

Although you may think you know your company best, the people who are interacting and consuming your product or service should be the actual experts. Paying customers should always be what drives meaningful change across your business. Do not be afraid to ask customers what they are looking for in your service and what they anticipate in terms of future need. Changing with the market means considering client needs in every decision. Through this, you can get insight into trends and start developing a plan for your company to grow and better serve your customers in the future.

If your business provides quality customer service, you are likely to retain your existing customers. This also means you have a greater chance of keeping and increasing your client base. This may mean pivoting your business towards new markets or products and services.

5. Adopting an effective marketing strategy

Marketing your business can be an expensive exercise, and during an economic downturn it's especially important to explore free marketing tools available to you, including social media and word-of-mouth advertising.

At the beginning of the pandemic, many small businesses had to close their retail stores as it was mandated to shut down nonessential businesses. Through opening online stores and using creative ways to advertise via social media, some small businesses were able to create enough revenue to stay afloat during uncertain times.

Always keep an eye on trending practices and norms making an impact on society. Look at how your consumer base interacts online. For instance, if your goal is to grab the attention of a younger audience, a proactive approach on social media platforms like TikTok and Instagram may be a good start. Hiring young minds and participating in current trends is an effective way to reach your audience, as these social media platforms curate content for each individual viewer.

6. Networking

Networking during an economic downturn can be useful to understand how other businesses are coping. You may also discover new opportunities, customers, staff, suppliers and business partners with minimal cost to your business.

Consider forming alliances with other businesses, for example, by offering complementary services and discounts.

FOR INDIVIDUALS

1. Gain new skills

Many people have lost their jobs or experienced pay cuts due to the economic downturn. Though disappointing, this shouldn’t be a discouragement. Rather, it should serve as an opportunity to learn new skills. Learning valuable skills can enable individuals to get new and better jobs, with a higher pay. It can also help them to establish their own businesses in the long run.

2. Be innovative

The COVID-19 pandemic birthed a lot of businesses that have now become successful. During that period of change and uncertainty, some individuals were able to reflect, identify problems and come up with innovative solutions. For example; food and grocery delivery services, online consulting services.

Individuals can be innovative and come up with ideas that make things easier for people and businesses. This would help to improve employment and foster partnerships with already established businesses.??

In conclusion, building resilience and adaptability in an economic downturn is no easy task. It takes a lot of determination, focus and hard work. But, with these points listed above, you can overcome challenges and be on the right path to growing your business, and forging ahead in your career in this present economy.?