Weathering an Economic Downturn
How to prevent panic when a recession hurts your business.
During my working years, I’ve lived through at least three recessions—and survived them all. Surviving was not easy in my early days of personal training, but I did learn from each of the slow periods that my business experienced. I progressed from twiddling my thumbs and worrying in 1988 to planning and actively accepting the reality of slowdowns today. During the 20 years I’ve worked as a personal trainer and coach, I’ve learned some valuable and critical lessons from recession periods that have made it possible for my business to flourish today. These lessons taught me to act and plan for future periods that might be less than robust. If you want to thrive as a long-term business owner, personal trainer or coach, review the following 5 critical lessons and apply them to your own business.
Lesson 1: Don’t Panic
Isn’t it funny how we forget some of the rough times? My mom recalls how much I fretted and worried in the 1980s when I was building my business during an economic slump. All I remember is the ample free time I had to sit by the pool at my apartment and read, and how little extra spending money I had. I lived lean but never regretted the decision to leave the public school system and work for myself. In my early years, I was close to a panic when business noticeably slowed. How would I pay my bills? How long before I could start new clients? Did I need to change my fees? Even though my clients never saw it on the outside, I felt the pressure inside. I knew even then that it is very important to present a professional, polished, positive exterior for your clients, regardless of your own fearful thoughts or feelings of inadequacy.
No matter how bad the situation looks for your business, don’t panic. Slow times pass, and good times return. However, it may take several months to a year to really see the turnaround. Even seasoned veterans experience reductions and fluctuations in income as the economy adjusts itself. Tell yourself, “This too shall pass,” because bad times always do. To minimize your panic, practice lessons 2–5.
Lesson 2: Stop Unnecessary Spending
When I begin to see that a downturn is coming, I start to slow my spending. I do not like pulling from my emergency savings unless I absolutely have to. If I start having difficulty filling my goal number of hours for the month, I begin making adjustments in my attitude and spending habits. If business has been down the past several months and you foresee the slow times continuing, quit spending in categories that are not absolutely essential to surviving or operating your business. Try cutting back in areas such as clothing, eating out, entertainment, vacations, travel, book clubs, spa treatments and technology gadgets. I learned from past mistakes to practice living by a budget that is below my actual income. Then, when slower times roll around—as they always do—I am still making the income I need to thrive. Here are some financial tips to help you adjust to recessionary periods:
1. Adjust your budget to match your lower income.
2. Eliminate all unnecessary expenditures until things turn around.
3. Do continuing education at home via Internet or self-study courses.
4. If you take vacation time, stay home and enjoy sleeping in, reading, seeing movies, visiting friends, etc.
5. If you do not have 6 months of living expenses saved, make that your number-one goal. Quit contributing to retirement for a while if you have to, to accumulate the emergency savings that you need.
6. Resist the urge to pay on credit; you’ll just dig yourself deeper into debt.
Lesson 3: Adjust Your Fees and Work Schedule
This recommendation may not be a popular one among other personal trainer and coaching colleagues, but the reality is that you may need to lower your fees a bit during really tough financial periods. If you are charging at the top of the scale, you can offer temporary discounts if your clients need that as an incentive to continue training or coaching. Or you can reduce the number of sessions clients must commit to per month to reduce their monthly bill. If they normally train eight times per month, they could reduce their training to four or six times. If your schedule is slowing noticeably with no increase in sight, you might want to offer a discount for the next 3 or 6 months. Ideally, you will have been living below your income anyway and the slower schedule will not require you to reduce fees. Unfortunately, many people are living at or above their bring-home pay and an economic slump reveals a desperate situation that calls for desperate measures.
You may also consider altering your ideal work schedule to make the money you need. When I was experiencing tough financial times, I worked whenever I had to, to bring in the income I needed. As the situation later eased, I added clients back into my ideal work schedule and eliminated sessions slated for times when I did not want to work. You must adjust to the situation at hand and maintain a positive and grateful attitude.
Lesson 4: Get Organized
Over the years, I have learned to take advantage of slower weeks, months or years by using free time to get myself more organized, both personally and professionally. I evaluate my business practices and work on changes as needed, review and update my client forms, study client folders and programs and rethink my marketing strategy or lack thereof. I now look at a less-than-full week or month as a temporary gift that allows me extra time to rework my business goals and see if I am still headed in the right direction. I have added Pilates and wellness coaching to my repertoire and have invested extra time in training and self-study. You can also use your newfound gift of time to attend extra networking events or chamber-of-commerce luncheons. The key: Look at this free time as a gift that must be used wisely.
Lesson 5: Plan for Future Slow Periods
The most valuable lesson I’ve learned during my 20-year business journey is to be prepared for the next time something unexpected happens! I determined how much savings I needed and saved it, I upgraded my clientele so that the people who hired me were generally unscathed by economic downturns, and I always made sure that my budget needs were less than my income each year. I do not have any credit card debt and am diligently working toward paying off our home mortgage and car loan. If your finances and living practices are in order, slow times will barely faze you. During the extra time you have right now, make a list of the actions you need to take and the changes you need to make in your lifestyle and business to be prepared for the next economic slump and reduced client load.
Surviving the Roller Coaster Ride
When my husband and I met with our investment adviser at the beginning of this year, he told us that 2008—and possibly some months of 2009—would be a roller coaster ride for the United States economy. As the new year has progressed, it certainly appears that way! Although it is impossible to plan for every event in life, it is possible to better position yourself financially for periods of slow business. Instead of panicking, which appears to be a popular activity on Wall Street, plan. Take the time to review the 5 lessons: don’t panic, stop unnecessary spending, adjust your fees and work schedule, get organized and plan for future slow periods. I have adjusted my attitude over the years to accept slow times in my business as a gift. And in the process, I have gratefully adapted to smelling the roses.