5 Companies That Beat an Economic Recession (and How)

Photo by Micheile Henderson on Unsplash

The economy is in the midst of a boom that some speculate may be coming to an end. The Dow has set more than 70 new record closing highs since the 2016 presidential election, and job growth has been climbing steadily since the Great Recession. Some people believe that stocks are overvalued, and since the economy naturally must grow and shrink periodically, many of those people believe we’re overdue for another recession.

Economic recessions are hard on most businesses, and if you’re an entrepreneur, the next great downturn could be the last nail in your startup’s coffin. However, recessions don’t automatically kill all businesses or even make all businesses suffer; in fact, some companies thrive during recession, and you can study them to learn key tips, tricks, and transformations that can get yours through whatever economic hardships come next:

1. Lego. When you think about families cutting costs to save money during times of economic struggle, you’d imagine plastic building toys to be at the top of the list of luxuries. Yet, while most companies were scrambling to survive, Lego saw profit growth of more than 63 percent, reaching an all-time high of profitability. Why? There are a few reasons, but the most important was expansion into the global market. While Americans were facing the worst of the recession, Lego expanded into Asia and made concentrated efforts to build sales in Europe.

2. Groupon. Many companies that survived the recession had an excellent infrastructure that they’d built in the decades leading up to it — but not Groupon. Groupon launched in the middle of the economic chaos, in November of 2008, and quickly spread to 35 different companies, eventually turning down a $6 billion buyout from Google. Why was Groupon popular? Because it gave both consumers and businesses a way to survive the recession; consumers got deals everyday to help them save on almost anything you can think of, and businesses got a relatively inexpensive way to generate new interest and customers.

3. Netflix. Now the streaming powerhouse of the world, Netflix had humble beginnings as a DVD-by-mail service in the mid-2000s. When the recession hit, many entertainment-related companies scrambled to survive, but Netflix found its footing and skyrocketed in subscribers. Netflix attracted 3 million more subscribers by the end of 2009, and its stock rose in price by 57 percent. Part of the reason for Netflix’s timely success was its ability to stand in as an alternative to cable and satellite TV services, which were a far more egregious monthly expense. Consumers preferred paying a fraction of that cost for similar entertainment value, and Netflix won out in the end.

4. Amazon. Retail companies were hit hard by the recession, but Amazon stood strong, seeing sales actually rise by nearly 25 percent. Why? Amazon unveiled many new product offerings, including the Kindle 2, which helped boost sales during the holiday shopping season. On top of that, Amazon has always made profitability a secondary priority to customer service and competitive dominance; it was able to offer more products for lower prices, which made it a top choice for consumers trying to save some money.

5. Domino’s. Domino’s pizza wasn’t America’s favorite pizza chain when the recession hit, but the pizza giant wasn’t ready to give in to its competitors. In 2009, Domino’s announced that it was changing its signature pizza recipe somewhat dramatically, spending millions of dollars on research and a new marketing campaign to raise awareness. Despite fears of a “New Coke” style failure, the new pizza was a massive success, and drove up both sales and profits for the company.

Key Lessons to Note

So what are the key takeaways to learn here?

· Look for new opportunities. First, look for new opportunities wherever you can. If the recession is located in one specific country or one geographic area, consider expanding to new territory. If your target audience is suffering, change your offers or find a new audience. If there’s something wrong with your company model, don’t be afraid to reinvent yourself.

· Help those in need. Both consumers and businesses struggle in an economic recession, so find a way to serve those sufferers specifically, with lower prices or new opportunities they can leverage to make it through.

· Present an alternative. In a recession, people will make hard choices about what to cut out of their lives. If you can give them a more cost-efficient alternative to what they’re cutting out, you’ll stand to win big.

Almost any business has the potential to survive an economic downturn — even though some may have more potential than others. As long as you’re committed to improving your business, transforming in key ways, and trouncing the competition, you can weather the storm and emerge as an even better company — and a more experienced entrepreneur.

CEO of EmailAnalytics (emailanalytics.com), a productivity tool that visualizes team email activity, and measures email response time. Check out the free trial!

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