Best Business Ideas During Economic Crisis

Best Business Ideas During Economic Crisis – Summary Some companies can make gains during severe recessions and recessions. Over the past four recessions, 14% of large companies have increased their sales growth rate and EBIT margin. A shock like the Covid-19 pandemic can cause lasting changes in consumer behavior. To survive and thrive in a crisis, start by examining how people spend their time and money. Challenge conventional wisdom and use data to actively investigate anomalies and surprises. Next, adjust your business model to reflect behavioral changes by considering what new trends mean for how you create and deliver value, who you partner with, and who your customers should be. Finally, put your money where your analysis takes you and be prepared to make more aggressive and dynamic investments.

Some companies can make gains during severe recessions and recessions. In the last four recessions, 14% of companies increased their sales growth rate and EBIT margin.

Best Business Ideas During Economic Crisis

A shock like the Covid-19 pandemic can cause lasting changes in behavior, and those firms are quick to detect changes, adjust their business models to reflect them, and not be afraid to invest.

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Examine the changes in the way people spend their time and money and the implications for the businesses involved. Look at what the changes mean for how you create and deliver value, who you partner with, and who your customers should be. Finally, be prepared to put your money where your analysis takes you.

It will take some time to understand the full impact of the Covid-19 pandemic. But the history of such shocks tells us two things. First, some companies can make gains even in severe recessions and recessions. Among large firms doing business during the last four recessions, sales growth rates of 14% and EBIT margins increased.

Second, crises produce not only temporary changes (mainly short-term shifts in demand) but also some permanent changes. For example, the 9/11 terrorist attacks caused a temporary decrease in air travel, but they also caused a permanent change in societal attitudes about the trade-off between privacy and security, resulting in consistently high levels of screening and surveillance. Similarly, the SARS outbreak in China in 2003 accelerated the structural shift to e-commerce and paved the way for the rise of Alibaba and other digital giants.

In the following pages, we’ll discuss how companies can redefine their growth opportunities, realign their business models to better understand those opportunities, and redeploy their capital more effectively.

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The Covid-19 pandemic has severely disrupted global consumption, forcing (and allowing) people to abandon old habits and adopt new ones. A study on habit formation suggests that the average time to form a new habit is 66 days, with a minimum of 21 days. As of this writing, the lockdown has already been long enough in many countries to significantly alter the underlying patterns of demand and supply.

Companies that want to emerge stronger from the crisis must develop a systematic understanding of changing habits. For many organizations, a new process for detecting and evaluating shifts is required before they become clear to all. The first step is to map the potential for behavioral trends to identify specific products or business opportunities that will grow or shrink as a result. Consider how the pandemic has forced people to stay home more. An increase in home office renovations is fueling more demand for products ranging from paints to printers. If we do not educate ourselves to new habits and their indirect effects, we will fail to detect weak signals and miss opportunities to shape the market.

The next step is to classify demand shifts using a simple 2×2 matrix, based on whether they are likely to be short-term or long-term, pre-crisis trends, or emerge after it began. The four quadrants are distinguished into Boosts (temporary departures from existing trends), Displacements (temporary new trends), Catalysts (acceleration of existing trends), and Innovations (new lasting trends). Consider again the “stay at home more” behavior change that has had a serious impact on retail shopping. The question is, will the shift from retail stores to online be temporary, or will it be a structural shift with permanent implications for other sectors, such as commercial real estate?

We will shop in the catalyst quadrant. The pandemic exacerbated and accelerated an existing trend rather than creating a new one; Before the lockdown, people were switching to e-shopping. But the shift is structural rather than temporary, as the scale and duration of the forced switch, combined with the channel’s generally positive performance, suggests consumers may not need to switch back in many shopping categories. So retailers must adapt their strategies to the new normal. Indeed, before the lockdown many retailers responded to the digital challenge by redefining the purpose of the physical store, often reimagining shopping not as a chore but as an engaging social experience.

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So this framework can be used to highlight which trends to follow and which to shape more aggressively. Companies cannot pursue every prospect, nor should they attempt to. To get an idea of ​​which ones to back off, ask yourself if any change in demand is temporary or permanent. Many of the immediately observed shifts in response to Covid-19 were driven by fear of infection or compliance with official directives and were therefore largely temporary. But others had more convenience or better economics, so they were more likely to stick.

Any analysis of growth opportunities must go beyond a simple categorization of what you already know. You need to challenge your assumptions about what is happening in your traditional business domains and take a fresh, careful look at the data. This requires you to actively look for anomalies and surprises.

Anomalies are typically granular (reveals patterns hidden by top-line averages) and high frequency (allows emerging patterns to be identified more quickly). As behavior has changed with the outbreak of Covid-19, rich sources include data on foot traffic and credit card spending. An analysis shows that movie attendance in the United States was down before theaters closed. This, combined with the ongoing trend of declining attendance, suggested that the change was consumer-driven and likely to persist in the absence of innovation. Live sports attendance, in contrast, declined only when events were officially canceled, indicating a strong likelihood of behavioral reversion.

In the military, one technique for finding out what you don’t know is to use “enemy eyes.” Military leaders ask themselves, what does the enemy care about? Then shift your own focus accordingly to illuminate potential blind spots and alternative perspectives. This can be applied to industry leaders and competitors: Who is doing better? What market segment are your competitors focusing on? What products or services are they launching? The same principle can be extended to consumers: Which new behaviors are exhibited? Who was faithful? What new crisis-driven needs do consumers have and what do they care about? It can even be applied across countries: What patterns have emerged in China, where the outbreak and recovery came first compared to the West? In your own organization, ask: What workplace innovations are happening at leading organizations? What new demands are employees responding to? What opportunities do they represent that might be developed and expanded more broadly?

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By understanding where your opportunities lie, you can now move on to the next step: designing your business model to capture them.

Your new business model will be shaped by the demand and supply shifts associated with your industry. For example, many manufacturing companies will be deeply affected by the structural and potentially lasting impacts to globalization brought about by the pandemic. For example, as large markets like the United States raise trade barriers, many companies need to realign critical elements of their supply chain—from R&D to assembly.

To understand what business model the new normal requires, you need to ask fundamental questions about how you create and deliver value, who you will partner with, and who your customers will be. As an example, let’s look at how retail shopping businesses need to adjust to the demand shift to digital.

Many retailers have traditionally derived the value they provide to customers from the quality of their in-store service. Consider the Chinese cosmetics company Lin Qingshan. It has suffered a 90% drop in store sales since the outbreak, forcing many locations to close and others seeing less foot traffic. In response, the company developed a strategy for digital engagement with consumers that replaced the in-store experience: It turned the company’s in-store beauty advisors into online influencers. The success of this move has prompted further investment in digital channels. Thanks

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