Business Stories: 6 Ways Businesses Have Overcome Economic Crisis
Becky Martin, writer
Published at 28/03/2020, Updated on 04/05/2022 , Reading time: 5 min
With the spread of COVID-19 set to turn the UK economy on its head, we thought we’d use this opportunity to highlight how businesses have overcome economic crisis in the past.
This is a difficult time for everybody, and while we are set to have a challenging period ahead, it’s helpful to remember that there’s always a light at the end of the tunnel. Today we look at real life stories of businesses that have faced adversity and have managed to overcome an economic crisis.
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6 ways businesses have overcome economic crisis
1. Lego – expand into a global market
During economic struggle, plastic building blocks might not be on the top of a family’s priority list. Yet, during the Great Recession between December 2007 and June 2009, Lego actually experienced a profit growth of 63 percent. But how? The main way it achieved this was by focusing on its expansion into the global market. It expanded into Asia and built up sales in Europe.
What can we learn?
In tough times like these and any future business crises, you need to look for any opportunities that arise. If a recession is mainly affecting one geographic area, think about expanding into a territory that hasn’t been hit so hard, if even at all. Want to know whether Lego franchises in the UK? Click here.
2. Groupon – give customers what they want
Lots of the businesses that stayed afloat during the recession did so because of the fantastic infrastructure they’d established in the years leading up to it. This wasn’t, however, the case for Groupon. In fact, Groupon entered the market when the economic crisis was in full swing, and in November 2008, it actually turned down a $6 billion buyout from Google.
How did Groupon achieve such impressive popularity so quickly? Well, it helped both customers and businesses overcome the economic crisis. Customers had access to daily deals so they could save money on eating out and other non-essential services and the businesses could generate new customers relatively cheaply.
What can we learn?
Essentially, Groupon’s services helped those in need. Both consumers and franchises struggle in an economic crisis so, if you can, find a way to offer lower prices or new opportunities so they can make it through.
3. Ford – complete business overhaul
Ford, like many other big players in the car industry, were in financial trouble during the recession. Faced with safety issues, recalls and disappointing sales figures, the future of Ford wasn’t looking bright. When CEO Alan Mulally took over, some light started to shine through. After three years of cuts and losses, it had a net income of $2.7 billion in 2009. In 2018, this figure reached $3.67.
What can we learn?
Sometimes, it takes a complete business overhaul to make it through an economic crisis. Ford eliminated models from its line and revamped its brand image to get it back on track in a difficult time.
4. Intel – be patient
Intel waited patiently during the recession while client companies put computer purchases for their employees on hold. After the economic crisis ended, its profits reached a 10-year high.
What can we learn?
Sometimes, it pays to sit tight and wait for demand to return. Intel did exactly that and reaped the benefits when the effects of the recession had diminished.
5. Amazon – increase product offering
It can be particularly difficult for retail businesses to overcome an economic crisis, as buying a new handbag isn’t classed as an essential purchase for many individuals. But Amazon proved resilient and experienced a sales growth of almost 25 percent.
One factor that contributed towards this was it launching new products like the Kindle 2, which were very popular in the festive period. However, for many businesses, being able to offer a new product range when times are tough simply isn’t doable.
Amazon did also offer more products at a lower price, so it also remained popular with customers on a tight budget.
What can we learn?
If you can, think of new products your business can launch in periods where people are more likely to loosen the purse strings, like holidays. And sometimes it can prove successful to put customer service and being a first choice above profitability.
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6. Netflix – present a cost-effective alternative
When Netflix started out, it wasn’t the global streaming powerhouse we know and love now. It actually offered a DVD-by-mail service. When the Great Recession hit, rather than failing to survive like lots of other entertainment companies, it actually managed to grow its number of subscribers. By the end of 2009, three million more people had signed up and its stock price surged by almost 60 percent.
To many customers, Netflix was more appealing than its competitors, thanks to its more affordable monthly subscription in comparison to cable and satellite TV services.
What can we learn?
When working through a recession, people will find ways to cut costs wherever possible. If you can develop a strategy that gives consumers a more cost-efficient alternative to what they were considering cutting out, you should have earned yourself a new and larger pool of loyal customers.
6 more tips to overcome an economic crisis
- Identify your problems
- Revisit your budget plan
- Determine your financial priorities
- Address the problem – often this involves reducing expenses and increasing income
- Use tools to improve employee retention
- Look for growth opportunites
- Develop a plan of action
- Track your progress
Economic crisis – your business can make it through
With the looming economic crisis, you’re understandably going to be concerned about how your business will make it through. Hopefully, these six tips will help you navigate the current business crisis, and also any more that arise in the future.
Considering a career change? Check out our top 10 recession-proof business sectors to consider now.
Becky Martin, writer