Month: April 2009

21 Apr 2009
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The Recession is Good

Wow. That is a bold statement for a blog post. Who in their right mind would think a recession is good?
People are losing their jobs, the housing market is in the toilet and no one can get any kind of loan.

Let me explain my way of thinking.

Reasons recession is good for the individual
The reason a recession is good is that it forces people out of complacency. When times are good, we go through our daily routine, sell the way we have always sold, marketed the way we have always marketed, bought the way we have always bought, etc… So we tend be liberal with our money, and throw it around a bit. The recession has made us all think more about where our salaries go.

Reasons recession is good for companies
Companies are now forced to really concentrate on what their product/service offers. There are many “me too” products out there that satisfy a need but are of lower quality and have no real value. Companies that exploit this are going under and when they do they are removing their crap from the market. Once the economy gets going again, demand for all products will go up, consumer spending will rise and there will be fewer retailers out there to provide the supply to the consumer. These stronger companies will benefit immensely from all the second rate businesses that have been taking market share. Jobs will return, sales will increase and we will have weeded out all the weaker firms. I guess it is like a Darwinian business theory.
The other reason a recession is good for companies is because they will now be forced to innovate to improve their offerings. For example, I went to a gas station the other day and as soon as I pulled up, an attendant came walking out of the store directly to me. I was wondering what he was doing until I realized that this particular gas station was now full service!! With no increase in the price of gas.

I vaguely remember this as a kid and haven’t seen something like this in quite a while. I thought it was a terrific idea. A truly value-added service that can really differentiate this chain of gas stations from all the others. Now this isn’t the invention of the iPod or the Wright brothers and the first flight, but I believe this will make this chain stand head and shoulders above the crowd.

The recession is forcing companies to think about their offerings, products, services and in some cases, their entire business  models. No complacency means better products for us, the consumers. Long live the recession!! (not really, but you get my  point)

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