Why economic downturn is GOOD for your business

In middle of this economical downturn it is hard find positive things from constant flow of ever more negative news. At the same time there is great need to find positive signs things getting better, worst being experienced already? While these are news we may have still to wait why not try to see other side of coin.

Less money, more results

Having less money around, there is less things you can do. Now how this can be a good thing? In situation of limited resources you are forced to look the optimum way to reach certain result. When pursuing for goal you are much more challenged looking to alternative paths how to reach it. It the “fat old days” not so long ago it used to be that you had plenty of choices that you could choose from –developing certain online service you could choose doing it yourself, finding right partner to do it or use already some existing and modify it.

Now with fewer resources many of the top decisions are already done for us. We can only focus on the really relevant doable options and just have to discard others. So this means we have to sacrifice some of the results also – right? Think again.

Scarcity brings clarity

There exists interesting study of comparing human performance in different option spaces. Economic game involving MIT-students moving in the virtual rooms / options aiming for best possible income provided interesting results. The performance of players actually dropped 15% when more options were introduced. This is because of human psychology; “Closing a door on an option is experienced as a loss, and people are willing to pay a price to avoid the emotion of loss”

Putting this into business context is kind of interesting. The downturn has closed many doors for all of us and sure it hurts us but as that is something we cannot change let’s think that the economy did us a favor – we even may have some increase in productivity.

Other means speeding up on the downturn

Less competition. Competitors decrease as the players with weak business models drop out. Just make sure you are not belonging to that group. There is also chance that some players are forced to move in to your market but established players should be in good position to counter new entrants.

Good people. It is easier to keep and recruit new employees. Not many are willing to change jobs on downturn so there is good chance keeping the key people for your business. Those companies that end up with difficulties may have to lay off good people so capturing a talented individual or even a team is a good possibility.

So at the end economic downturn and scarce resources do not have to mean fewer results and may even be an opportunity to getting more done and build your business ready for the economical rebound. Who knows – maybe the recovery can be as fast as the tumble.