The World is entering into a recession period and the exception is likely to be India and China with ~2% GDP growth in 2020 which is way below 5 – 8% in the past several years.
For the benefit of all, I am sharing my perspective on such scenario on few aspects as below:
What will change during the slowdown
Spend on luxury will come down drastically
Long-term / Capital expenditure such as construction, technology will be almost cut to nil
Lifestyle expenditure such as salary, rent, infrastructure, entertainment will be minimised
Working capital will be under tremendous pressure. Businesses will go out of business especially those who are riding on borrowed working capital
New innovative business models will evolve
What will NOT change during the slowdown
People consumption on essentials will continue
Rise in Investment on ideas/technology solutions that will improve efficiency
Short-term trading businesses with healthy cash flow practices will thrive
A rise in investment on spiritual / self-learning practices
Value for money products/services will shine
What you should do as an individual
Hold back any luxury / high-risk investments where visibility of returns is difficult to predict
Minimise expenditure on the routine stuff – keep a watch on your lifestyle spends – ask the question, is it really necessary!
Develop yourself on improving competency and developing skills to become sharper and efficient
Share the financial situation with your family members and educate them on the family financial position and the plans to improve
Invest – yes invest in the right things. History repeats. Take risks based on thorough research. This is not the time to follow tips.
What you should do as an Entrepreneur
Take care of your employees – communicate more than ever. Be reasonable and transparent with them
Use the slowdown to improve your processes/people
Invest in technology/systems that will accelerate your reach in adding value to your customers
Be frugal in working capital decisions and operating expenditure
Capital expenditure to be on hold unless there is clear visibility on the associated returns
Let us get smarter by helping ourselves and the economy to bounce back stronger.
The planning for the coming foreseeable.
This Thought Through Article was Written by Businessman and billionaire Dr Sudhir Ruparelia the founder and Chairman of Ruparelia Group, Uganda’s leading conglomerate.
