Ep:15 Recession:101 A Trip Down Memory Lane and the Lessons We Learned from Them

In keeping with the same topic theme of recessions, in today’s podcast episode, I wanted to apply a different lens and share with you a different perspective. Instead of talking about the losses that each of these events resulted in, I want to change the focus and turn that around by talking about the gains. 

 And in this case, the gains are the historical insights and the invaluable lessons each recession has taught us. It’s my hope that you can take those lessons and practical tips and apply those key learnings so that you can build a stronger and more resilient business. 

I’ll first start by taking you on a trip down memory lane and providing a deep dive into the history of all the recessions so you can gain an understanding of each of them. And then, I’ll move on to sharing the lessons that can be gleaned from each of those profound, historical events. Whether you’re a seasoned entrepreneur or one in the making, these lessons will be valuable to you as you move forward. 

Transcript

0:04

Hi, and welcome to the Brave Pivot Podcast. I'm your host, Cindy Marie Ferguson. I'm a former corporate girl turned entrepreneur, business educator, and mentor here to help you build a profitable and successful business. After the kids' corporate and chaos. On the podcast, we'll have honesty, meaningful conversations around becoming an entrepreneur, starting a business, building a brand, and my favorite. Systems and processes and so much more. If this sounds like your thing, stick around each Wednesday through guest interviews and solo episodes. I'll be providing insights, tools, business strategies, and actionable support to help you along the way on your entrepreneurial journey. Get ready for some candid conversations, inspirations and invaluable insights. I'm so delighted you're. Let's dive in and get started. Hello and welcome to another episode of the Brave Pivot Podcast, your go-to podcast for all things business and entrepreneurship. I'm excited and grateful that you're here. Thank you for spending your time with me. In this week's episode, I'm continuing with the same topic theme as last week. On that episode, I took a deep dive into why launching a startup during a recession might be your golden ticket to success. If you hadn't had a chance to listen to last week's episode, check it out. That's episode number 14, and it's entitled Five Tips on Why Starting a Business during a Recession is a Winning move. On that episode, I shared some hidden opportunities and advantages that you can leverage to kickstart your entrepreneurial journey and turn your small business dreams into reality. I hope you check it out and let me know your thoughts. Now in keeping with the same topic theme of recessions in today's podcast, I wanted to take and apply a different lens and share with you a different perspective. Instead of talking about the losses that each of these events resulted in, I wanted change the focus and turn that around by talking about the gains. In this case, the gains are the historical insights and invaluable lessons each recession has taught us. It's my hope that you can take those lessons and practical tips and apply those key learnings so that you can build a stronger, more resilient business. I'll first start by taking you on a trip down memory lane and providing a deep dive into the history of all the recessions so that you can gain an understanding of each of them. And then I'll move on to sharing the lessons that can be gleaned from each of those profound historical events. Whether you're a seasoned entrepreneur or one in the making, these lessons will be valuable to you as you move forward. Starting with The Great Depression. Ooh, that was a big one for That one. Lasted from 1929 to 1939. The Great Depression was the longest, most severe recession of the 20th century. It began with the Stock market crash of October, 1929, and it lasted for about a decade. The unemployment rate in the US reached a staggering 25%. Bank failures were widespread and more than 5,000 banks had gone out of business. Many businesses and individuals lost everything. And here's the practical lesson, the importance of a stable and well-regulated financial system. The Great Depression taught us that unregulated speculation and excessive borrowing can lead to economic disaster. This lesson eventually led to the creation of regulatory bodies like the Securities and Exchange Commission, as well as the implementation of key regulations such as the Glass Steagall Act which separated commercial and investment banking activities. Here's a lesson to your apply for your business. The Great Depression taught us that anything can happen at any given time. It's always a good idea to be proactive and plan ahead and set up an emergency fund. While understanding an emergency fund alone won't mitigate risks such as this in its entirety, it's a good proactive measure to have in place. Moving on to the second recession, which is the Oil Crisis Recession from 1973 to 1975. The 1973 oil crisis was a result of the OPEC oil embargo, which caused a severe spike in oil prices. This led to high inflation, reduced consumer spending, and ultimately, of course, a recess. Gasoline shortages and long lines at the pump became the norm, and the crisis had a lasting impact on the global economy. Here's the practical lesson, the need for energy independence and diversification. The oil crisis recession highlighted the importance of having a diverse energy supply in reducing dependence on foreign oil. The lesson led to increased investments in alternative energy sources, such as solar, wind, and nuclear power, as well as the development of fuel efficient vehicles and technologies. And here's the business lesson here. Keep an eye on global events. International crisises can impact your business even if they seem unrelated. You wanna stay informed and ready to adapt to changing circumstances. Also diversify your product offering. Don't put all your eggs in one basket by having a singular product offer and look for affiliate marketing programs and secure based, secure brand deals and sponsorship opportunities. This way, you have multiple income streams coming from different revenue sources, and you're not reliant and on a singular source. Moving on to the next recession, which is the early 1990s, recession from 1990 to 1991. Now, this recession was triggered by factors such as the savings and loan crisis, the high oil prices due to the Gulf War, and a slowdown in the housing market. Unemployment rose. Consumer confidence dropped and businesses face difficult obtaining credit. The lesson this recession taught us is the danger of over-leveraging and poor lending practices. The savings and loan crisis expose the risk of poor lending practices and the need for proper oversight and regulation in the financial sector. As a result, stricter capital requirements and regulations were implemented to prevent similar crisises in the future. Here's the business. To glean from this, you wanna strengthen your network, build strong relationships with customers, suppliers, and partners who can help you keep your business afloat during economic downturns. Also focus on cash flow. As we all know, cash is king. Keep a close eye on your cash flow and make sure you've got enough liquidity to ride out the storm. Moving on to the.com bubble recession from 2000 to 2001. the.com bubble was a result of excessive speculation in internet based companies. Investors were pouring money into tech startups, many of which had little to no revenue. When the bubble burst, that tech heavy, NAS Index index lost nearly 80% of its value and many once promising companies folded. Here's the practical lesson, the importance of fundamental in investing. The.com bubble taught us that companies valuation should be based on strong business fundamentals, such as revenue, profitability, and growth, potential, and not just hype in speculation. This lesson has since guided investors to be more cautious and discerning when evaluating investment opportunities, and here's your business. Don't get caught up in the hype when investing in new ventures. Be cautious of overvalued assets or industries. You wanna do your research, look at the data, and make informed rational decisions. Moving on to the next one, which is the Great Recession from 2007 to 2009. Ooh, that was a tough one. It lasted 18 months from December, 2007 to June, 2009. The Great Recession was triggered by the subprime mortgage crisis. Which led to a global financial meltdown. It was the most severe recession since the great depressions with millions of job lost housing, foreclosure, skyrocketing, and many businesses collapsing. Here's the practical lesson, the importance of responsible lending and risk management. The great recession exposed the need for tighter regulations on lending practices, better risk management, and more transparency in the financial sector In. Governments around the world introduce stricter financial regulations such as the DOD Franked Act in the United States to help prevent future crisis. Here's a fast fact. The US Federal Reserve government spent 787 billion to stimulate the economy during the Great Recession under the American Recovery and Reinvestment Act, according to their Congressional budget office. Wow, that was a lot of money, and here's your business lesson. You wanna keep a pulse on the market and your budget. Always be pre preparing for the unexpected. Keep a close eye on non-fixed expenses and increase your cash reserves. You wanna reduce cost. Be more efficient and selective when hiring suppliers. Stay cautious and read the economy carefully. Moving on to the last recession, the Covid 19 recession from 2020 20 to 2021. It's 2023, and I believe we're still feeling the effects of that. The COVID 19 pandemic took the world by storm causing unprecedented disruptions to the global economy. The government imposed lockdowns and social distancing measures led to massive job losses, business closures, and to sharp decline in economic activity. That pandemic also exposed an exasperating existing inequalities and vulnerabilities in various sectors. Here's your practical lesson, the importance of adaptability, resilience, and preparedness. The COVID 19 recession demonstrated the need for businesses to be agile and adaptable in the face of unforeseen challenges. Companies that were able to pivot through strategies and embrace digital transformation and implement remote work arrangements were better positioned to weather the storm. Additionally, the pandemic underscored the importance of having robust contingency plans and safety nets in place to mitigate the impacts of future crisis. And here's your business lesson. You wanna build a resilient supply chain. Global disruptions can affect your supply chain. Diversify your suppliers and logistics partners to minimize risk. You also wanna embrace remote work and digitalization. The pandemic accelerated the shift to remote work in digital service. Stay ahead of the curve by embracing these changes and investing in a digital infrastructure. Lastly, if Covid 19 taught us anything, it's that technology can disrupt markets. Keep an open mind, be flexible, and don't be afraid to pivot your business model. As we've explored these six major recessions, it's clear that each one of them offers valuable lessons for both your seasoned and aspiring entrepreneurs alike. These historical events provide insights that can help guide you in building stronger, more sustainable businesses. By learning from the past, we can be better prepared for the future and navigate the inevitable ups and downs of the business world. Armed with this knowledge, you'll be better equipped to face the challenges and seize the opportunities that lie ahead on your entrepreneurial journey. Thank you so much for joining me today. I hope you enjoyed our conversation. If something I shared today resonated with you, please tag me@cindymarie.co on Instagram. If you enjoyed this podcast, please leave an honest five star review. When you do, it helps us to grow the podcast and helps others to find us as well. Be sure to subscribe to the podcast so you know when the new episodes are being. You can subscribe right from the app that you're using to listen to this podcast, or you can sign up for email alerts@cindymarie.co. Lastly, if there's something you'd like to hear about in a future episode or if you just wanna stop by and say hello, please feel free to DM me@cindymarie.co on Instagram. Thanks again for listening to The Brave Pivot Podcast and I'll see you next time.