Business Survival in Downturns and Recession

Business Survival in Downturns and Recession
September 7, 2022 Rob Artigo
In Podcasts

There is little debate that the economy has hit the skids. Is your business ready? In this Tough Things First podcast, also available in video, Ray Zinn explores being prepared and what to do in the thick of financial woes that will keep you ahead of the game. (Watch This Podcast on YouTube)


Rob Artigo: I’m Rob Artigo, writer and entrepreneur in California, your guest host for this edition of the Tough Things First podcast, special video edition. Hello, Ray.

Ray Zinn: Hello there, Robert. How are you?

Rob Artigo: I’m doing well, sir. Thanks for bringing me back once again.

Ray Zinn: Oh, listen, my pleasure. It’s great to do it this way.

Rob Artigo: Well, for our casual audio listeners out there, a very popular podcast, the Tough Things First podcast. If you’re interested in seeing the video option for this podcast, go ahead and check out You click on the podcasts, find this post, and there will be a link there for this video. Now if you’re watching the video and you want to listen to more podcasts, just head on over to the same place, and click on video posts.

There are many dozens, and I don’t know, we might be into 300 podcasts by now. Who knows? Well, Ray, let’s get into the topic. In a recent podcast, you described how downturns were inevitable and they tend to come around about every three to five years. In 2008, the so-called Great Recession, it was significant and lasting, so let’s start by just asking you is what we’re facing now potentially worse than what we experienced during the Great Recession?

Ray Zinn: Absolutely, mainly because the political climate is so tenuous, and so we not only have just the economic problem. We also have this really dissension that’s going on, divisiveness that we see permeate our country, and that, I think, is serious or more serious than what we had in 2008. You know, I recall the implosion which happened in 2001. It actually began late 1999, and then it rolled into 2001 is when the bottom actually occurred, so everybody remembers the implosion. As you mentioned just as you started, these things happen every three to five years and we just have to be ready for them.

That’s part of what I want to talk about today is it’s inevitable that we’re going to have these downturns and I believe the one we’re in now, and I believe we are in a recession, what’s interesting is that everybody clamors about the two consecutive quarters of a negative GDP. But that’s not the key. The key is if Q1, which is the second quarter of the year, is down relative to Q1, that’s a recession. Every recession has occurred when there’s been a downturn in the second quarter relative to the first quarter, and so that’s the clue or the key is the downturn that we experience in Q2.

That to me is the main indicator of a recession, so yes, we are in a recession and we need to get prepared for it, and we need to flourish during a recession. That’s what we’re going to talk about today. As a kid, I remember my mother reading to me this children’s story about the grasshopper and the ants. The ants were, during the springtime and the summer, they were just going at it, storing up for winter, as you would, whereas the grasshopper was playing his fiddle and dancing around and having a gay old time, and wasn’t prepared for winter.

When winter came, of course, the ants were enjoying, down in their world, their ant world, they’re enjoying a great winter because they were prepared for it. They had all their storages were there and they were prepared for winter. The grasshopper, of course, was knocking on the door of the ant colony saying please let me in, and of course the story is that you need to be prepared for winter. Winter doesn’t necessarily mean the cold. It just means that time of year, or that time of the season when things get tough. We are in tough times. There’s no question about it. We have stagflation. We have inflation with slowing growth, or not growth. We’re having a recession.

The key here is some people say they can’t stand prosperity. In other words, like the grasshopper, they tend to live the good life during the good times and not getting ready for the bad times. That’s how you flourish during bad times is you get ready for it, just like the ants, the ants living a colony. They were enjoying a great winter because they were prepared. That’s one advantage that you have is looking forward, knowing that there’s going to be a winter, which we use the recession as the winter, and they are ready for it. Being prepared, that’s the Scout motto. Be prepared. We need to get prepared for these downturns.

Rob Artigo: You know, you are well known for building in your preparedness plans for those downturns in your business plan, as you’re looking forward for the next year, two years, three years. You put those things in. If a new entrepreneur is trying to build in a preparedness plan, what does being prepared, in terms of a long-term outlook or plan for your business, what does it look like when you’re building in something that says all right. I’m going to expect a downturn at some point, and these are the check marks I’m going to hit to make sure that it’s built into my plan?

Ray Zinn: Well, having enough cash to survive a downturn. That’s the key. You can’t go out of business if you have the money. Keeping yourself with a good amount of working capital is key. I like to say you need at least nine months of working capital. A downturn lasts anywhere from a year and a half to two years, and so having at least nine months will give you some runway so that you can be prepared for the length of the winter, as they say, or the length of the recession. That’s what I use is at least nine months and maybe a year.

Rob Artigo: Well, there’s a lot of uncertainty in the world, obviously. We’ve got a global uncertainty in terms of the sociopolitical strife that’s going on out there, various parts of the world, and it’s really affecting everything that we do in business in America, because we have such reach in terms of our business relationships in this country, and so we don’t really know what’s going to happen. But being prepared helps you weather the storm, but there’s also the subject of taking advantage of the opportunities that are presented to you during a downturn.

Like you said, there are some people that like the ups and downs of things because they like to see the peg fall so they can jump in and ride the wave back up again, which is a strange way, well, not a strange way of doing it, but kind of a risky way if you’re going to market time and do all those things. But let’s talk about just simply as a business person, how do you try to find ways to take advantage of the downturn so that you’re at least not suffering major consequences that other people might be suffering?

Ray Zinn: Well, as they say, if you don’t take care of your customer, somebody else will, so taking care of your customer, loving them to death, showing them a lot of attention is key to thriving during a downturn. I like to call it loving them to death, and so just show them lots of attention, find out what their needs are, and then focus on their needs and you’ll find that this will last through the recession, and actually when things turn around, they’re going to remember it and they’re going to say wow, I sure like the way you took care of me, and so I’m going to stick with you. One of the key things is to love your customers.

Rob Artigo: How about the idea, we talk about pivoting all the time on this program, and I’m not talking about shifting a product line or rather shifting products from buggy whips to widgets. I’m talking about there might be opportunities within the dynamics of the downturn where you can adapt a product you already have to suit that need. I was watching a forensics program the other day, criminal forensics program the other day, and they had this tool they used. They used this little tiny vacuum dauber thing and they wetted a rock, and they were able to suction up microbes and things that are on this rock.

They were able to analyze that and pull out actual DNA that was there, and it had been there for years perhaps. It was dried and everything else, but they never had found this before. This tool came from a completely different usage, and they realized hey, maybe this will work for this and it turns out it’s like a miracle forensics tool, so you never really know when a new need will arise for a product in the downturn because of uncertainty. By the nature of it, you don’t know where it’s going to go and something might present itself and you should keep your eyes open. Correct?

Ray Zinn: Absolutely. We have things we refer to as discretionary items and then non-discretionary items, and so what you want to be looking for is to make your product more non-discretionary. Back to loving your customer, you got to make your product sound like he has to have it, and that’s what a non-discretionary product is. It means you have to have it. You can’t do without it. Discretionary products or discretionary services are things we can do without.

Take for example your hairdresser or your barber. You could have your spouse or your significant other cut your hair and so that’s more discretionary. You just have to make your, if it’s your services, providing hair care, then you have to make it sound more non-discretionary, which means you have to do a much better job at the service company taking care of your hair than your spouse or your significant other. Again, make your product non-discretionary, or service non-discretionary, meaning they just have to have it.

As I talk about, in some of our podcasts, on reviews if you look on Amazon or Ebay, looking at reviews, you’ll mostly find that customers complain about quality and service. The quality is make sure that the haircut or the hair product that you’re doing is so much better than they can do on their own, or whatever service you’re providing is much better than they can get anywhere else. That’s referring to is making your service or product non-discretionary. That’s the key in keeping customers.

The other one of course is service, meaning just love them to death. Service the loving daylights out of them, and that’s key. A lot of times when we have a recession or a cutback, we tend to cut back on everything. We cut back on quality, we cut back on service. That’s the exact wrong thing to do. That’s 180 out from what you should do. You should provide better quality, better service than you do during good times, so don’t cut back. If you cut back you’re just cutting off your nose to spite your face.

Rob Artigo: Yeah, and I guess you’re motivating your teams to pick up the phone when somebody calls, no matter what it takes, rather than in the past maybe you could put something off for a minute or two. But in this case, make sure you have the staff ready to go and paid and on the clock when customers are going to call because that’s going to be that customer service you’re talking about.

Ray Zinn: Well, as I mentioned earlier, people can’t stand good times, can’t stand prosperity. What happens is during good times they get in bad habits. They don’t service their customers. They don’t have the quality product. They actually do worse during good times. That’s one of the advantages of having a recession is it does help us clean up. It helps clean up our act, and so now’s the time, since we are going into this recessionary period, now is the time to improve your quality, improve your service. Don’t cut back. I know it may be a little more expensive because you’re not getting the revenue that you were before, but be one who can stand prosperity. That’s what you want to do. You want to stand it. You want to be prepared for it. You want to actually be ready for these downturns and service the living daylights out of your customers.

Rob Artigo: Wow. Thanks, Ray. Great advice. Well, that wraps it up for this edition of the Tough Things First podcast. This has been a special video edition. Don’t forget to go to your favorite podcast site where you’re listening to this podcast or watching this podcast and make sure you rate it so that we continue to be a top-notch, number one podcast for Silicon Valley and business, and is always your source for all of Ray’s posts and more podcasts, links to all the social media out there, and of course you can find more information about Ray’s book, Tough Things First and his other books, Zen of Zinn One, Two and Three. Thanks again, Ray.

Ray Zinn: Thank you, Rob. Great to be with you again.

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