How entrepreneurs can win during economic downturns

    Opinions of contributing entrepreneurs are their own.

    A few friends and I opened a very expensive business just five months before the pandemic shut down all in-person events in California: a 72,000-square-foot gym for youth sports, AAU basketball, and club volleyball.

    We invested seven figures to convert an empty furniture warehouse into a beautiful 12-lane gym. And once we booked and committed most of the upcoming weekends for 2020, the pandemic came and our entire state halted in-person events and youth sports. It was devastating. It took so much effort to transform the space into a beautiful gym and get all the commitments and reservations done for the coming year, and it looked like it was going to be an imminent disaster for us.

    The longer the pandemic lasted, the worse things looked for our new business. Our beautiful, new gym was empty and quiet—a company we’d talked about starting together for nearly a decade. And it would disappear from under us…

    Related: Tips for surviving an economic downturn from a serial founder

    Be creative in difficult times

    There was a point when we turned desperation into hope by jumping into a long Zoom conversation and deciding that we wouldn’t end the conversation until we had some good ideas to save the company. We talked about virtual sports training, but that didn’t seem profitable enough to pay the bills. After many hours of discussion, we came up with a creative idea to transform the sports facility into a tutoring center for children of ‘essential workers’. We found an obscure rule in California that would allow in-person gatherings of students for tutoring and supervision if their parents were essential workers, otherwise the children would be left home alone to attend a remote school.

    It seemed like a wild idea, but at the time we were desperate and had to try it. So we bought a bunch of desks and supplies and turned the gym into a place where kids could get some form of education and supervision. This pivot helped us serve our community in a great way and build a reputation for trust and leadership during a very difficult time. And guess what… it was key to helping us pay our bills and keep the lights on at a time when other sports stores were closing their doors!

    There is no better feeling as a founder than from barely surviving to succeeding and thriving! I am happy to report that we are blooming today! Our gym is fully booked every weekend with tournaments and events for the year ahead, and every night of the week you can see it packed with kids and teams training and playing sports. The most important lesson is that you have to be creative in difficult times. As an, you face major challenges and are forced to make tough decisions. What are you going to do when your back is against the wall? Will you innovate and adapt? Or do you turn off the lights and go home?

    You take unusual risks when you start your own business and you could lose everything you worked for at any time. Uncertainty is what you signed up for. Recessions are always a threat and the next unforeseen challenge is often just around the corner. Whether you’re brand new or a seasoned, prepare to be tested. You and your team must remain flexible and open, yet committed to serving the customers and customers who need what you offer.

    Related: How to Recession Proof Your Business

    Invest in yourself, your marketing and the well-being of your team

    In difficult economic times, companies typically cut spending and resources. However, that may be the exact opposite of what you should be doing. It might be better to invest in yourself, in your marketing and in the well-being of your team. Providing adequate resources and support for your team will keep them engaged and productive, which is critical in more uncertain times.

    For example, during the onset of the Covid pandemic, markets declined, our operating income declined and the outlook was very bleak. I called a team meeting to discuss our game plan and have an open discussion with everyone. They were no doubt worried about possible pay cuts or layoffs. Instead, I took the opportunity to express my appreciation for their hard work, loyalty and dedication. We have agreed to shorten our office hours to give everyone more time for their family. I also gave them a raise as everyone was feeling the pain of the pandemic and rising inflation. And we’ve had those reduced, family-friendly office hours for three years and counting now!

    I used the extra time to write my first book, which reminded me of the importance of investing in ourselves and creating content that benefits those we serve. This decision to invest in employees rather than profit made a big difference, and we were able to thrive and ultimately grow during the recession. Investing in yourself and the well-being of your team will more than pay for itself in the long run. We redoubled our marketing and branding efforts to differentiate ourselves from competitors and decided to grow rather than go into survival mode.

    If you choose to use uncertain economic times to invest in your team and your customers, your relationships will become much stronger. You build a reputation as someone who rises to challenges as a leader. Stay optimistic, make adjustments, be flexible and put your people’s best interests at the center of your decision making. Loyalty and success will follow as you learn that together you can weather any storm.

    Related: How to Prepare Your Business for an Economic Downturn


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