A recession is possibly the best time to launch a new business or to expand an existing one. It’s also a great time to get ahead in your career. I know this sounds counter-intuitive, so let me ‘splain.
First, the media goes nuts during a recession. They turn a little bit of negativity into a mountain of pessimism. This makes a lot of people financially paranoid. People become socially conditioned to expect the worst.
If you buy into this social hysteria, you become a victim too.
But if you tune out such stupidity (not watching TV helps a lot) and maintain a grip on rational thought, you’ll see some amazing opportunities popping up everywhere you look.
During such times people get scared and start cutting back on expenses. They cut some of the fluff from their lives. They stop buying so much stuff they don’t need.
This causes some businesses to do poorly, especially businesses that don’t provide stuff we really need. We can live without new credit cards and gas-guzzling SUVs for a while. Those non-essentials can be put off.
We also become more sensitive to receiving genuine value. When we spend money, we want to make sure we’re getting a fair deal.
Consequently, businesses that provide genuine value can actually do better during a recession. More people will flock to those businesses in tough times, while the fluff businesses will become more and more paranoid.
In the USA there are a lot of fluff businesses. Many are based on the moocher mindset, trying to extract money without providing fair value in exchange. A lot of the dead or dying financial companies are like that. The American auto industry has been contracting as well, at least in part because they’ve been creating inferior products that people don’t really need. (Erin and I own a Honda, despite the fact that we could have gotten a significant discount on GM cars because two of my family members used to work for GM. We looked at some GM cars and quickly concluded they sucked. Other family members weren’t so lucky.)
A lot of people have been learning that job security doesn’t mean much these days. More than 500,000 Americans learned this lesson last month when they lost their “safe and secure” jobs.
The Stupid Approach to Making Money
Lately I’ve seen a lot of people, some of them friends, do some really dumb things in an attempt to earn more money. They buy into lame money-making programs, join and promote useless MLM schemes, and fall prey to scammers.
The common pattern is always the same — they’re focused on trying to make more money. They make it their top priority. They think about it constantly. But they keep getting sucked into trying to make money without providing any real value, and it’s unsustainable.
In the end this sort of thing eventually self-destructs. The only way to succeed with it in the long run is to find lots of suckers and basically rip them off in order to enrich yourself. Most people have a strong enough moral resistance to this sort of thing that they’ll sabotage themselves from going too far with it. This isn’t a path of long-term abundance. It’s a path of scarcity.
As a general rule, the people I know who are most focused on trying to make more money this year are doing worse, not better. In some cases they’re doing much worse. A few have lost or are in the process of losing their homes.
The exceptions are those that are able to sufficiently kill their conscience, so they can remove any incongruencies about ripping people off. But again, this is a pretty rare exception. Most people would rather deal with scarcity than knowingly rip people off to get ahead, so they just make the bare minimum to meet their needs and avoid getting ahead.
The Smart Approach to Making Money
There is a smarter approach, however.
Instead of focusing on trying to make more money, put your time and energy into CREATING and DELIVERING real value. Find a way to give people what they want and/or need.
Take note that the keywords here are CREATE and DELIVER.
Creating value means expressing your unique talents and skills in a way that can potentially benefit others.
Delivering value means ensuring that other people are actually receiving and benefiting from the value you’ve created.
If you don’t do both in some fashion, then it’s going to be hard for you to generate sustainable income, especially during a recession. I’ll explain why.
If you only create value but don’t deliver it, then your value isn’t being received by anyone. So how can you receive value (such as money) in return?
I see this problem a lot with creative types such as would-be artists, musicians, and writers. They may spend lots of time honing their craft, but if they don’t actually get that value into the hands of sufficient numbers of people, they struggle financially, and this hurts them creatively too. A goodly number of these people are currently seeing their homes in foreclosure now.
The sad thing is that some of these people work very hard. But they spend too much time creating and not nearly enough time delivering. They watch people they consider hacks pull ahead of them. The hacks may not be as good on the creative side, but at least they’re getting their value into people’s hands, and on some level people are appreciating their work.
I went down that road myself. In the late 90s, I went bankrupt, even though I was working very long hours and creating a lot of potential value in the form of a computer game my company was developing. My problem was that I didn’t do a good job of getting that value delivered. I relied on publishers to do that, and for various reasons the game was never released. That resulted in years of wasted effort, aside from the valuable learning experience that is. So I know where this road leads because I traveled it.
On the other hand, if you only deliver value but don’t create it, then you’re delivering someone else’s value. This isn’t a terrible approach in the short run, but it’s a short-sighted long-term strategy if this is all you do. There’s nothing particularly special about delivering other people’s value. Anyone can do it. Anyone can sign up for affiliate programs or join an MLM program or become a reseller. If this is your primary means of generating income, your long-term outlook is weak. The better this works for you, the more it will draw competitors into your field. Eventually everyone will be working harder and harder for scraps. This happens all the time. This strategy can be especially weak during a recession, as more people turn to less expensive sources for the same value you deliver, squeezing your profit margins thinner and thinner.
Bloggers fall into this trap when they rehash other people’s content and don’t really have anything unique or compelling to say. A year later their niche is flooded with competitors doing the same thing. And hardly anyone is earning decent income from it.
The most viable long-term strategy is to create AND deliver value. You can mix and match other strategies with it, but this should be your primary method of income generation. If you get good at creating and delivering value, you can basically write your own ticket and enjoy lots of abundance.