What To Do In Good Times And In Bad
We are in strange times! It wasn't too long ago it seems the economy was roaring. Stock prices were at all-time highs, and interest rates and unemployment were at historic lows. Then the onslaught of the pandemic caused the stock market to plunge and unemployment to skyrocket.
Thousands of businesses closed, in the process eliminating or laying off thousands of workers, and we felt like we were on the precipice. Fast forward a few months and the economy was seemingly on the road to recovery. The stock market climbed out of the ditch, and unemployment went even lower.
We are now approaching midpoint-2022, inflation is at record highs, home prices are overheated and the stock market is once again taking a beating. How are you supposed to make any financial plans in an environment like this?
The purpose of this post is to help you make some sound decisions both in good times and in bad! Let's first talk about what to do during down cycles.
What To Do During Down-cycles
1. Don't panic. The economy will eventually rebound. No cycle lasts forever. In the interim, begin looking for opportunities. In every cycle, there are winners and losers. The pain is real, but certain industries are poised for growth in this crazy age we are in. Portions of the medical sector, telecommunications, and delivery services will continue to thrive. How can you position yourself within an ascendant industry? This could be your big opportunity!
2. Be adaptable. Have you adapted your business to a virtual or hybrid environment? Every industry is grappling with this new reality. Mega churches have moved completely online and saw their viewership increase in the process. Many have claimed that their financial contributions have remained steady due to the use of online giving. The NFL held its first virtual draft. Consider how you can take your business online and sustain it there for extended periods.
3. Learn a new skill. Downtimes provide time for introspection and learning. It is much harder to stop and change directions amid the hustle and bustle of boom times. Down-cycles deliver the gift of time. Perhaps it is time to learn a new skill or to consider how you may adjust what you do professionally to suit an unpredictable economy. This should not be wasted. It should be a time of significant growth and learning. As more people move online, it may be time to update your technical/computer skills.
4. Be entrepreneurial. This is the age of the free agent. Is there a need that you can fill? Can you start something for profit? Even if you currently work for or plan on working for a company or organization, you must think like an entrepreneur. Become an “in-trepreneur." Your seniority and experience at your company may not carry the day. You will have to provide leadership and bottom-line results to thrive within a company during a down-cycle. Run your team or your department as if it were your own.
What To Do When The Economy Rebounds
1. Get out of debt. Your goal is to prepare yourself for the next economic bust when assets become devalued. Debt hampers you from capitalizing on those assets (real estate, stocks, and bonds, businesses) when they go on sale during the bust cycle. You cannot take advantage of those opportunities when you are mired in debt. So, pay off your debt and build some savings for the future.
2. Become an investor. The wealthy own assets, the rest own liabilities—things that cost money to own and maintain. Spend some time in thought about how you may begin to invest in income-producing assets. Begin reading up on how to do this. “Rich Dad, Poor Dad” by Robert Kiyosaki is a great place to start.
3. Be flexible. The world moves at a rapid pace. This demands flexibility. Things will not remain the same, nor will they go back to the way they were before Covid-19. Keep your eyes on the economic cycles and prepare yourself to thrive in good times and bad.
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