Since the outbreak of COVID 19, there has been one term on the mind of many business owners worldwide: economic recession. In the last month, we have seen the stock market take a 25% dip as industries experience a slow down on both ends of the spectrum. This means that we are not only experiencing a business interruption in the form of less production due to decreased availability of raw materials, but consumers are also being more cautious with their spending in an effort to give themselves a safety cushion.
An economic downturn can be the result of many different factors, some of which are synthetic and others organic. What do we mean when we say synthetic vs organic, you may wonder. This means that some are due to unforeseeable circumstances that could not be avoided, while others are caused by unscrupulous actions on the part of banks and financial institutions.
The second of these is exactly what we saw happen in 2008 when the housing market crashed. A cycle of irresponsible subprime lending practices caused one of the worst economic climates we have seen since the Great Depression.
The subsequent actions of the Obama administration, however controversial, did keep the money machine moving and may very well have protected the country from entering into an irreversible state of economic downturn. However, it did little to protect the average consumer and small to medium sized companies. Many businesses were left with no alternative but to shut their doors for good.
Some saw this collapse coming, and some were able to profit immensely by essentially betting against the stock market, a term known as “putting.” What makes this current situation unique, however, is the fact that no one saw this coming, and no one has ever seen anything like it. It took the world by storm, and government officials, along with their constituents, are left in a reactionary position in which we are all beginning to see the preliminary effects the pandemic is having on the global economy.
There are several enormous industries that have felt the impact so far, and it is only a matter of time before these effects “trickle down” to the rest of us. For the sake of avoiding the topic of international politics and trade policy, we will look at the airline industry as an example.
It shouldn’t come as a shock to anyone who reads this to learn that major airlines are suffering greatly as a result of the newly implemented restrictive travel policies. As airlines are forced to stop sales of airfare, and people are either hesitant or unable to travel, airline sales in some major carriers have dropped their capacity by as much as 75%.
You may think that such large companies should have enough money to weather the storm, but let’s take a moment to look at the bigger picture. These businesses have a massive overhead to meet, and there are dozens of other industries that are affected by a decrease in international flights or may rely on them entirely. Gas and oil, tourism, and the eCommerce supply chain are among some of the first that come to mind. Because the entirety of production and commerce is fueled by oil in one way or another, we could easily write an entire piece on how the oil industry is being affected, but today we want to focus more on the average consumer and privately owned business.
Among all the major airlines in the world, there are literally tens of thousands, if not hundreds of thousands of individuals and families who rely on a weekly paycheck from these big businesses. When airlines begin to lay off workers, these individuals will then be forced to live on unemployment benefits, receiving only a fraction of their normal wages. This means that they will have to tighten their budgets and will no longer be able to pu werchase some of the basic commodities that most Americans are used to. Many other businesses will suffer losses resulting in a cumulation of millions of dollars in decreased sales across the country.
Many of these businesses will be left with no alternative other than to lay off their workers, and the process will continue from there until every facet of the economy has been touched in one way or another by these unprecedented circumstances.
We do not wish to enter into a political debate, as now is a time when Republicans and Democrats should set aside their differences to focus on bipartisan efforts in support of the average consumer. With that being said, there has been an effort on the part of the Trump administration to do just that, and we hope that it will provide the needed economic boost to keep trade and commerce moving forward.
The agreement made “across the aisle” will provide $2 trillion that will be dispersed among consumers, small businesses, the public health industry, and FEMA to provide relief to those who have suffered health and financial problems as a result of the COVID19 pandemic.
The stimulus package includes a one time payment in the form of stimulus checks of up to $2,400 for couples earning a joint income of less than $150,000, plus $500 for each child. For small businesses and nonprofits employing fewer than 500 workers, the bill provides almost $350 billion in partially forgivable loans to help with business operations, along with $500 billion for the Treasury and Federal Reserve to provide liquidity and purchase business, municipal, and State debt.
This influx in cash flow from stimulus checks, along with tax returns, is going to pump hundreds of billions of dollars into the economy, and the vast majority of this money will go into the businesses and personal bank accounts of average citizens.
The money that will go to help businesses will provide massive relief to company owners who may be questioning whether or not they will be able to meet their overhead in the coming months and possibly years. On the other side of the coin, the money that will go to consumers will only boost the economy if they spend it. The problem with this, as we mentioned before, is that people are more likely to save during times of economic hardship than they are during times of prosperity, decreasing the amount of cash flow for businesses.
How Businesses Are Being Affected
This is clearly evidenced in the amount of organic search traffic being seen among different industries since the coronavirus outbreak. In some of these industries, we have seen a massive increase in search traffic since the outbreak of the COVID19 pandemic, and these are the usual suspects: health care, food, finance, media, and pharmaceuticals. If you are operating outside of these spheres, you have more than likely seen a decrease in traffic and conversions. Though a decrease in traffic poses some short term setbacks, it is vital that you focus on the long term to ensure the continued success of your business.
It is estimated that every time the market experiences a drop of 20% or more, it takes an average of 536 days for the economy to recover. With that being said, we need to look at the common denominator in this situation: nearly every industry in the world is experiencing the effects of the economic slowdown. As a result, individuals and businesses will drastically cut their spending to mitigate the business losses they will see due to decreased production and spending.
How to Protect Your Business
This means that as a business owner, you must find ways to provide so much value to your customers that it would be irresponsible for them to not do business with you. It goes without saying that the way in which you do that will entirely depend on what type of business you are running.
Some ways you can accomplish this include providing information to your customers at no cost, offering membership and reward packages for loyal customers, and including add-ons and discounts for larger purchases. The first of these is a key element to acquiring new business. You can find the answer to nearly any question on the internet, and as a business owner, you need to be the person who provides those answers and solutions to consumers within your niche and industry.
You can do this in the form of webinars, live Q&A, video content, blog content and articles, social media content, white papers, case studies, etc. Your business’s success may depend on the implementation of some or all of these tactics, especially during challenging times of economic uncertainty.
As we mentioned previously, all businesses are in the same boat since the coronavirus outbreak, and because this means your competitors will likely be cutting their ad budget, this presents a unique opportunity for you to get ahead of the competition. We can not emphasize enough the importance of keeping an active online presence during these times. As you already know, if you do not have a website and are not searchable on Google, in most cases, you do not exist.
Doubling down on your marketing efforts during the coronavirus pandemic will mean the difference between coming out of these challenging times on top and playing an extremely competitive game of catch up when the economy stabilizes. Use this time to establish brand authority, and you will thank yourself in the future.
The Bottom Line
The absolute truth is that when times of economic hardship hit the population, the result is always the same: market share is consolidated further into the hands of big corporations who have the ad budget to continue business operations and marketing to their audiences. This is not due to some concerted effort to snub out the little guy; it is a matter of simple economics. Eventually, the economy will stabilize, and those who are still around will be the same as those who are sticking to their marketing efforts. If we look at statistics and percentages, we know that the pie isn’t going to get any smaller; the pieces, however, will get bigger.
Be sure to claim your share of the market and keep your business afloat by producing valuable content for your customers and establishing brand authority. You can visit our website to stay updated as we continue to provide coverage on business matters related to the coronavirus pandemic.