The emergence of COVID 19 has created a recession like never before. Regardless of the industry you work in, you are impacted by its presence. Problem is, there is no sight of it ending any time soon. This means that you need to understand what recession is, why it is taking place and how you can avoid its extreme after effects once the situation gets diffused.   Let’s take a look at recession and what it means for us.

 

What is Recession?

In the simplest of terms, recession is an economic decline which impacts trade and industrial activities. You can be a part of any industry or business, if there is a global pandemic, like coronavirus, you will have to face this economic decline. Of course some businesses experience worse effects than others, depending on the nature of their operations, their market and products.

 

Causes of Recession

Recession occurs due to many reasons. What facts show us though is that it isn’t as novel as many people like to believe. Rather, financial experts would tell you that recession occurs almost every 10-15 years.

In the 90’s it was the restrictive monetary policies, then came the Asian financial crisis, after which there was the attack of September 11, SARS, MERS, GFC and now it is the coronavirus.

But what are the causes of recession? How can you monitor and understand them?

There are basically 5 key causes of recession.  The first one which you are able to witness pre-recession is that interest rates become too high. If you check history, you will be able to see that all the GFC recessions have taken place when the government had heightened interest rates so much so that they stagnate the economy.

The second cause is increased levels of inflation, when money becomes cheap and everybody starts thinking of themselves as millionaires. This leads to the government stepping in and increasing interest rates which eventually leads to recession.  The third reason is when there is a magnificent drop in corporate profit levels.

This is happening right now, but the good thing is that the biggest corporations in market like Google, Coca Cola, Nike, Facebook etc. will still be able to create a cash buffer and save themselves.  Fourth reason is increased unemployment rates. This is clearly apparent in these times, when more and more people are losing their jobs.

They may continue to spend, but there is no job to cushion their increasing demands and needs. Fifth and final reason is global growth, which when it reduces drastically, could lead to a severe recession all over the world.

Therefore, so long as you see these factors appearing, you would be alerted to an oncoming recession.  Does this mean it is applicable in the current situation? Most definitely. What can be done in times like these?

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Here are some things to think about

People need to always be prepared and learn from these times of difficulty, so that they are wiser and better prepared for when the recession hits again. Here are some lessons you need to take from the recession that we are facing right now:

  • Always have cold hard cash in hand. Not in the stock market, not in housing, not in your businesses, but in your hand. This is important because it will save you from drowning not just personally, but also help your business transactions to run smoothly.
  • You need to have tools to let you know of any upcoming crash in the market. A forward indicator of sorts will help you know when such a recession is on the horizon and how you can reduce the damage it does to your business.

 

Measures to Avoid the Worst Possible Outcomes

The first worst and most damaging thing that you can do when you see a recession coming on is to believe that investments are expenses.

It is true that you need to become careful about how you spend, but these are the times when wise investments can be made, which will in the future bear fruit.

What you need to remember is that economic crisis occur every decade or so.

This is the reason why, whether you are in a dental practice or some other business, whether you work from home as a freelancer, or have a secure government job, you need to create wealth that is outside of your usual stream of income.

You need a separate account that is full of cash and can be used whenever such global breakdowns occur. This way, no matter what happens, you will always be finically secure.  In times like these, the most absolutely important thing that you can do for your business is to remind the clients or patients that you are there for them.

You can’t provide them all the services they might like because of government restrictions, but you are there in their time of need and as soon as things settle down, you will be catering to all their dental needs.

So it is essential that you make calls, send out texts and generally try to keep in touch with all of you patients, so that when all this is over, they remember how compassionate you were throughout the crisis.

Remember, no matter how bleak the situation may seem, this too shall pass and things will get back to normal again. Your business will go back its best. But in those good times, do not forget that such a recession will come again and the next time, you will be ready to defeat it. By preparing for it in advance you can weather any financial storm.

 

P.S. Whenever you’re ready …. here are 4 ways I can help you grow your dental practice:

1. Grab a free chapter from my book “Retention – How to Plug the #1 Profit Leak in Your Dental Practice”

The book is the definitive guide to patient retention and how to use internal marketing to grow your practice – Click Here

2. Join the Savvy Dentist community and connect with dentists who are scaling their practice too

It’s our Facebook group where clever dentists learn to become commercially smart so that they have more patients, more profit and less stress. – Click Here

3. Attend a Practice Max Intensive live event

Our 2 day immersive events provide access to the latest entrepreneurial thinking and actionable strategies to drive your practice forward. You’ll leave with a game plan to take your results to the next level. If you’d like to join us, just send me a message with the word “Event and I’ll get you all the details!  – Click here

4. Work with me and my team privately

If you’d like to work directly with me and my team to take your profit from 6 figures to 7 figures …. just send me a message with the word “Private”… tell me a little about your practice and what you would like to work on together, and I’ll get you all the details! – Click here

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