October 8, 2008. The blog homepage.

This recession thinking is bullshit

People are in a panic. Withdrawing money from banks, cutting spending wildly. Posters for fashion magazines offer to help you dress well “even in a recession”. Yamamori is offering a “credit crunch lunch” with champagne, like one last hurrah on the Titanic before it sinks beneath the waves.

But if you cancel projects primarily because we are in a recession, you’re a moron. In fact, now is among the best times to take risks with your business.

Deciding action

There are two questions you have to ask yourself about any project for your business:

  • Is this project a good investment?
  • Do we have, or can we get, the cash?

If you can answer yes to both, then personally I’d go for it. It’s a risk, but everything is a risk.

If the project doesn’t seem like a good idea now, why did it seem like one before the recession? Maybe it was a bad idea in the first place, so now is a good time to take a cold, hard look at your decision-making process and learn from your mistake.

But a good idea is a good idea.

Obviously the supply of cash may be affected by a recession, but the first place to find this out is not the newspaper. It’s your accounts, then your projected revenue.

Another thing to keep in mind is that this recession panic will also help you get better prices from your suppliers.

If the project is a cash-saving measure, which seems like it has legs, and you decide not to do it because of the economic climate, that inaction is itself very risky.

Decreased competition means risky bets are more worthwhile

There’s a recession on. So you’re afraid to take risks. But you’re not the only one.

Your competitors are under the same pressures, and will likely have similar thoughts running through their head. They will take less risks, spending less on new projects.

If your competitors aren’t taking as many risks, they’ve just made your field a whole lot less competitive. The potential pay-off from each risk taken just got bigger.

Further reading

Seth Godin, Looking for a reason to hide

Greg Story, Allayed

This is an Article. It was posted on October 8, 2008.

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