It’s crystal clear, an economic recession is coming. There’s gonna be some hard years ahead of us but not all is grim. Recessions create incredible opportunities that can allow you to add an extra zero to your net worth. So in this blog, I’m gonna give you a seven step game plan on what you can do to take advantage of this once in a lifetime opportunity. And by the end of this blog, you’ll be able to make the right decision on what’s best for your online business.
I got started in search engine optimization and affiliate marketing, smack dab, in the middle of the 2008 great recession. I’ve seen this all before. UK best IT cv writing service remember what it was like owning a website that used to make $5,000 per month, all of a sudden, only making $1,000 per month. I remember website traffic getting cut in half, not because of a Google algorithm, but because people weren’t able to afford what I was selling anymore.
My Business To Turn Everything Around
But also I definitely remember the adjustments I made to my business to turn everything around. But before we get to that what actually is a recession? Gross domestic product, also known as GDP is defined as the total value of all the goods and services a country produces in a given time period. When we have two consecutive quarters of negative GDP growth, that is what economists call a recession. How did we get here? Well, the pandemic kicked off.
The government started printing a lot of money to stimulate the economy, which then led to insane levels of inflation. So now, the Fed has to jack up interest rates to cool down prices and by association the economy. Combine that with supply chain issues and we got ourselves a good old fashioned recession. And if history means anything, we’re stuck in this for a minute, as a typical recession lasts about 17.5 months, according to this study by Kiplinger.
What Typically Happens During A Recession?
First, I’ll discuss what happens in general to most of the world. And then I’ll discuss what’s gonna happen to our world of online entrepreneurship. First off, it’s likely that the stock market will continue to fall. That said, it’s not a guarantee. This table shows the past recession since 1945. Historically speaking, we have about a 50% chance of the market falling and potentially as much as 38.5% as we saw in the 2008 recession.
But there’s also a chance that the market will stay flat or even rise. So, it’s not all doom and gloom when it comes to stocks. But what we can be sure of is that everyday people are gonna spend less money as fear and uncertainty of their jobs, incomes, and future sets in. This is gonna put tremendous pressure on businesses, which are gonna have to lay off employees just to stay afloat.
Unfortunately, Die Off
Some businesses aren’t gonna be able to stay afloat at all and will unfortunately die off. How about online businesses? Businesses powered by digital marketing and search engine optimization. Well, there’s no way around it, but websites and most niches will make less money. There’s a few reasons for this. First, the buyer intent of your visitors is going to decrease.
They’re just gonna be in less of a mood to buy things. Sure, you may still get visitors to your website selling above ground pools, but they’re gonna be like, wait a sec, do I really need an above ground pool when I might not even have a job tomorrow? What am I even doing here? Second, if you run display ads on your website, expect advertising fees to decline. Businesses are gonna have less money to spend on marketing. So your RPM will adjust accordingly.
Selling Any Subscription Products
Third, if you’re selling any subscription products you’re likely to get some churn. Folks are gonna be looking at their expenses which is something I’ll advise you to do later as well. And recurring costs will be on the chopping block. And based on my experience in the 2008 recession, non-essential niches will get hit even harder.
I Alluded To This Before
People don’t need golf range finders, psychic readings and above ground pools, in order to survive. These types of niches are gonna get hit twice as hard. If you’re like me and you build and sell websites for a living, expect multiples to fall. The market prices websites based on their average monthly profit times of multiple, typically between 40 to 50 X, this multiple will drop. Between 2020 and 2021, we saw multiples peak because of low interest rates. It costs basically nothing to borrow money.
Sure, I’ll buy your website for 55 times its monthly profit. I had a conversation with Joe Magnotti from Empire Flippers, who said we’re already down 10% from the peak and we can expect multiples to drop 10% more. That said, multimillion dollar businesses or businesses with a known brand can still command a premium multiple.
Marketing And Operation Costs Will Drop
If you’re doing SEO, expect to see the prices for content and links to fall. And if you hire a team, you’ll be able to access better talent for cheaper than before. I know a lot of what I just talked about, sounds downright discouraging. But what you need to know is that the amount of opportunity that arises during a recession is incredible. This is where you add another zero to your net worth.
Let me explain. Bad companies, the companies that were built on poor principles and were just propped up by money printing and a booming economy. These are gonna start going belly up. What this means for you is less competition. There’s gonna be much more room in the marketplace for good companies like yours to grow. As mentioned before costs are gonna get reset.
A Player Link Builder
I totally get why you weren’t able to hire that A player link builder or project manager or content writer. Because you couldn’t afford their inflated salary. The recession is gonna reset that. Most importantly, recessions are always followed by long periods of expansion cycles. Where there’s a rebound effect on economic growth. Since 1854, the average expansion cycle after a recession has lasted 38.7 months.
If you get your business in a position for this tidal wave of growth, you’re gonna re some insane rewards. So many successful businesses were started during recessions, including Netflix, Airbnb, Trader Joe’s and Microsoft for crying out loud. The time is now, if your business can do well in a recession, it will skyrocket during an expansion cycle. Here’s what you need to be doing.
Don’t Focus On Profit
Profit is king businesses that don’t focus on profit first will not survive. This requires you to operate lean, go download your PayPal and credit card statements and go through them line by line. Cut out anything that you don’t use or don’t need, especially non-essential subscriptions that are not necessary for your business to function. I hate to say this, but this is also the time to trim the fat and let go of any C or D player employees.
Any non-performers that have been weighing down your business need to go. Also consider selling off websites in your portfolio now, while they still have a nice average monthly profit and the multiples haven’t dropped. Of course, as I just said, profit and cashflow are king. So if you have any cash cow websites that take little work but generate pure profit, keep those around.
High Expense Sites
I’m talking about selling the high expense sites, that can get you a huge cash injection, so you can pad your bank account. Save cash, you’re gonna wanna have cash on hand for two main reasons. First, just in case the (beep) hits the fan, you wanna have an emergency fund to get your back. The typical emergency fund should cover you for three full months of expenses.
Second, you want cash on hand for all the opportunities that are gonna come up. The people who have cash or have the ingenuity to jump on the opportunities the recession creates are gonna crush it. During recession, mindsets, change and opportunities rise. Businesses need to market but the typical paid marketing channels are too expensive.
Paid Marketers Hang Out
You could go to the places that paid marketers hang out and position yourself as a cost effective SEO solution. People will still be traveling, but will opt for more cost effective destinations, like Thailand. Maybe it’s time for you to start that Thailand travel block. You want to be able to take measured risks. Risks that you can afford to take and having cash in the bank helps with that. Also, I got this one from a Valuetainment blog that really inspired me to make this blog for you.
You’re watching this blog right now because of a certain amount of fear and uncertainty. You want some advice on what to do. If you’re an agency, hold a webinar on how to continue marketing profitably during a recession, offer your service as the solution. If you’re an affiliate marketer in the finance niche maybe it’s time to pause making content on crypto. And instead double down on budgeting software. There’s plenty of opportunities like this. And the more you work on your business, as opposed to in your business, the easier the opportunities are to see. You want the breathing room to be able to notice all the opportunities.