How to Look at the Economy as a Business Owner

How to Look at the Economy During a Crisis or Pandemic

Today, we’re going to talk about the economy. How is the U.S. economy doing in 2020? We are still in the midst of COVID-19, so it’s not at it’s best, but hopefully we will be out of it soon. In the meantime, there’s a lot of things that business owners need to process. First, there’s one important question to ask: how are you looking at the economy?

Every day you’re faced with gloom and doom. You’re going to hear that companies are laying off people, GDP is lower, the stock market’s falling, and so on. So, how do you keep your sanity when you have a constant barrage of negative news? How do you maintain a positive outlook?

The Blind Man Analogy

We will try to answer these questions with a story. There was a blind man selling things from a cart on the street. One day, his son came to him and said, “Dad, what are you doing?” 

The blind man answered, “I’m selling my stuff.” 

The son asked, “But don’t you know that the economy is bad?”

The blind man replied, “No, I didn’t know. I guess I know now.”

After this exchange, the son left and came back a week later. He saw his dad sitting on the pavement next to the cart. He asked, “Dad, what are you doing?”

The blind man replied, “You told me the economy was bad, so I stopped selling.”

The Illusion of Negativity

You can see that the blind man was doing just fine when he didn’t know that the economy was bad. As soon as he knew, he assumed that he couldn’t sell anything in a bad economy and he gave up. What does that tell you? 

There are countless examples of businesses working through bad economies and coming out ahead. At the same time, there are countless examples of businesses that were destroyed during bad economies, simply because the economy did not meet their expectations. This tells you that it’s all about your perspective.

As a business owner, you will be faced with a constant onslaught of negativity, to the point that you feel like the world is going to collapse. The key is to realize that the world is not going to collapse and that this perspective is a mere illusion. You have to look past the illusion to see reality. The reality is that there is always something you can do; you can always navigate through tough times. 

How to Look at the Economy and Weather the Storm

To return to COVID-19, there are plenty of ways that companies can weather the storm. For example, there was a whiskey company that recently started selling hand sanitizer during COVID-19. Alternatively, a plexiglass company started selling its products to restaurants as barriers between tables. 

Both companies looked at a bad situation and, rather than giving in to the negativity, actually did something to enhance their business. Neither company allowed the current state of the U.S. economy to destroy their business.

Evaluate Your Product

In the Exit Mindset, we say that the product is king. Your product is the most important element of your business and a huge part of what potential buyers want to see. Now let’s return to the example of the whiskey company that started selling hand sanitizer. 

If you’re a potential buyer of that company, what would you think? You’d probably think that the company has more potential than a company that just continues to sell its product and doesn’t have the ability to pivot when necessary. As a result, the company would likely command a much better price. 

Evaluate Your Infrastructure

In tough times, many companies assume that they need to reduce their expenses by shrinking their infrastructure. This often results in layoffs. At the same time, you have companies that expand their infrastructure and bring on new staff. Naturally, the situation varies for each business. If you evaluate your business’ infrastructure, you’ll almost certainly find areas for improvement.

You can also improve your infrastructure by streamlining processes and finding ways to “trim the fat.” During normal economic times, you can look at almost any given company and find non-essential expenditures taking away from its profits. If you look at your own costs, you could find ways to streamline processes, reduce non-essential expenditures, and develop better cash flow. 

Evaluate Your Conversation

We’ve discussed the product and infrastructure, but now it’s time to look at the third element of the Exit Mindset: the conversation. The conversation refers to any verbal or non-verbal communication you have with the consumer. So, what can you do to improve the conversation?

You will need to see if you’re communicating with the consumer in a way that can be changed. In recent months, many companies have shifted their conversation to revolve around COVID-19. If you adapt the conversation to fit the times and your consumers’ needs, consumers will be more likely to engage with your business. So, take a look at how you communicate with the consumer and see how it could be improved.

Applying the Exit Mindset During Difficult Times

The Exit Mindset is all about looking at your company from the perspective of a potential buyer. Let’s say that you want to sell your company during COVID-19. As a buyer, what would you want to see in your business? Are there elements of the Exit Mindset (product, infrastructure, or conversation) that you could change to improve your company’s valuation?

Let’s return to the story of the blind man for a moment. If you give up because the economy is bad, you just guarantee loss. You secured a worse future for your business. Even with all the negativity you face on a daily basis, you need to filter out the illusions and focus on reality. You have to believe that the bad times will pass, because they will. Economies rise and fall like the tides. 

Speaking of tides, try to imagine yourself as the captain of a ship out on the ocean. There’s a storm coming and you have two choices. You can say “I’m going to sink” or “I’m going to get through it.” If you believe you can get through it, you will. You just have to evaluate the situation, make a plan, and set it in motion.

Developing a Plan for Your Business

You may need to make multiple plans during COVID-19. So, let’s say you have Plan A (six months) and Plan B (12 months). What does your plan entail? What steps will you take to reach your goal? Who do you need to consult? Which parts of the Exit Mindset do you need to focus on?

Once you can answer these questions, you’ll find ways that you can change or pivot your product, infrastructure, and conversation. Don’t forget to have some contingency scenarios as well. If you do all this, you’ll be better prepared to get through these tough times.

The Bottom Line

In business, the end goal is often surviving the storm. During normal times, you can afford to focus on improving and growing your business. However, during times like these, it’s all about getting through to the other side with your business intact. Once a ship sinks, it’s hard to bring it back to the surface. But if you can get your ship to port, even if it takes on a lot of water in the process, you can reach your goal and go from there. Remember: action is everything. Use it or lose it. 

Follow Exit Mindset on Facebook, LinkedIn, Twitter, and Instagram to learn more about how to look at the economy as a business owner! 

In this episode of the Exit Mindset, we join Rem Oculee, the Founder and CEO of Confidence Wealth Management, as he discusses how to look at the economy as a business owner and incorporate the Exit Mindset in your business.