Recession Ahead: Here’s How You Can be Prepared for It
The whole world finally seems to be paying attention to the hiring freeze and other news related to recession, of late. But, what exactly is a Recession and why are we freaking out? Well, Recession is a protracted period of diminishing economic performance across all indicators for any country! Businesses, investors and government officials keep an eye on a slew of economic indicators that can help signal or confirm the beginning of Recessions. But, the National Bureau of Economic Research (NBER) is the organization that declares a Recession.
Typically, during a Recession, the economy struggles, people lose jobs, businesses make fewer sales, and the country's overall economic output falls. Recession will have an impact on small and large companies too.
Impact of Recession on Small Businesses
Overall, the number of small enterprises in India is astounding. They were broadly defined as companies
These numbers shouldn't mask the fact that the majority of small firms are modest in size. Small and medium Enterprises (SMEs) are frequently struck the hardest by recessions, and many times they will not survive, shut down, and suffer losses.
The United Kingdom was the most negatively affected . As of the third quarter of 2020, the UK's GDP growth rate stood at minus 9.6 percent compared to the previous year.
The Indian economy's GDP contracted by minus 7.5 percent.
The United States' economy's GDP contracted by minus 2.9 percent.
During recession, this is how SMEs are affected:
Lack of Demand:
The recession will cause a decline in demand for small and medium enterprises. Only a decreasing flow will be seen. Business owners that rely on a small number of key clients for the majority of their income are at the risk of losing a sizable portion of that income if one or more of those clients reduces their purchase volume or stops buying altogether. The situation for the company is made worse if a major customer goes out of business, since not only will it lose regular business, but it may also fail to collect any money from the customer.
Financial difficulties caused by loss in sales and income may force small businesses to minimize expenses wherever they can. Reducing staff is one of the first actions a business owner takes because it is simpler to let go of employees than it is to get out of a lease. There aren't enough workers to complete the remaining jobs, whether the organization fires its most recent hires or those who are redundant as a result of lost business. So, the surviving workers may become overworked or disheartened. This further lowers the opportunity to create revenues.
Impact of Recession on Large Organizations
Recessions can affect even large corporations. The number of bankruptcy filings in 2020 was 244, which was a record high since 2009. Industries hit most included energy, retail, and consumer services.
Here’s how they feel the heat of a Recession:
Lower Revenue & Profits:
Companies' profit margins decreased during recessions, Most firms had decreased levels of sales and profit as a result of the recession, which led to the closure of some businesses. Less cash may result, which could be detrimental to the company's long-term survival as well as its short-term survival. Furthermore, the recession is still having an impact on most companies as their progress toward set objectives is being slowed by the revenue lost.
Reduction of Benefits:
In large companies, employees usually get additional bonuses and benefits apart from their basic pay. But during a recession, employee bonuses and benefits are severed in order to save money and sustain organizational flow.
Given that we have now seen how a Recession can impact small, medium and large corporations, let us get down to understanding how we can prepare ourselves professionally during this tough phase of economic downturn.
Ways to Prepare Yourself For the Recession:
1. Gain Value
When layoffs occur, individuals who aren't seen as adding value to the company are the ones who are most at risk. So, you can start exploring ways to contribute and establish yourself as a vital part of the team.
Deliver top-notch work and look for unique possibilities to contribute outside the parameters of your job description. Always search for methods that will increase your flexibility and ease of training for new jobs.
2. Performance Issues
No company or leader wants to fire employees on purpose, but it does happen occasionally during a recession. The HR must assess and record each employee's work before the recession hits.
Make sure you recognize the work in the interim. Your communication within the team and to the company also is crucial for your presence to be felt and known.
3. Learn New Skills
Learning new skills is a valuable asset for you and eventually, will benefit your company too. Don't wait for the company to come up with training events. You can show that you are a self-sufficient, driven employee who is eager to provide a great deal of value by learning new skills through independent study and research.
4. Optimize Your LinkedIn profile
Maintaining an updated CV and LinkedIn profile can offer you an advantage when time comes to start your job search. Having an updated job profile will give you an undue advantage if you lose your job, as you won't have to rush to update anything and you can start looking for opportunities, right away!
Connect on LinkedIn or interact with hiring firms like TechDoQuest that provide a variety of opportunities.
(Author: Praveena Battila is a chirpy & inquisitive digital marketing executive at TechDoQuest.)