1969 was not good. 1975 was grimmer. 1989, not nice at all with house prices falling. 2000 yuk! with all those internet companies going bust. Every recession is caused by madmen. They are all energetic, greedy, with brains but without common sense. This one is no different from the others. This includes the people who buy stuff they cannot afford and use credit.
Let us assume you have nothing now. First, your immediate aim is to build up some funds, you can’t do anything with out funds. It will take time, huge commitment and effort. If you haven’t got the drive, and the self-discipline then give up now.
If you have no money now. How to save some:
Saving is simple, everyone can do it. It means that you have to get more income, and at the same time spend less than you earn. No short cuts, just get on and do it.
My daughter came back from university during the last recession and announced she was going to get a job in the holidays. Her mother told her not to be ridiculous, no students could find work during that dreadful summer when the recession started.
That Monday she came home having landed not one, but three
jobs. She had a part-time job for the council waste department in the morning handling complaints, a separate sales office job nearby for the afternoon, and a restaurant job in the
evening to which she added weekend work. She is a grafter. All she did to land them was to ring up her old friends from school who were at work. She rang everyone she knew, just chatted to them on the phone, and landed the jobs.
She told us she preferred two part-time jobs to a full time job because she could earn more that way and it was easier to earn extra cash by volunteering for extra work in a part-time job.
She spent less money because she was at work the whole time. She had fewer coffees at Starbucks. She aimed to save 1 hour of her income every day. In fact she saved nearly half of what she earned. No borrowings, no credit cards, nothing was spent if she if not have to spend it. No clothes, no travel, no weekends away. She made sandwiches for lunch, and ate free in the restaurant kitchen.
How do you save this 1 hour a day? Well, it is not too difficult but you need to make a little sacrifice here and there. Stop taking that extra cup of coffee. Don’t have a pastry. Cut back on the evenings out a bit. Less clubbing, less drinking. Less partying. Not, no partying, just less partying.
Do some studying for your new career instead of going out?
You don’t have to give up everything. Just work out what 1/8th of your income is, and put that money away. (That is 1 hour a day). And calculate what you need to stop buying to save that amount. You’ll surprise yourself.
That is a good start - you don’t have to do this for ever but you’ll be getting into a good habit.
Improving your income:
However, you don’t get rich just by saving money and buying less. You’ve got to look at a much more profitable avenue as well - your income.
So next, you’ll need to earn more money. Most people stay in poorly paid jobs for far too long. Either you must get a better one, or you must get promotion.
You may have to do a bit of learning at this stage, you may have to study. Go to the reference library and do it there rather than buy books or attend courses. The reference library will give you masses of ideas, best place for research. You’ll need this library later when you are working for yourself and setting up your own enterprise. Work out what you could earn doing something else and then go for it.
In a job now? How to do better:
If you are in a well-paid job now, then make sure you do the job well, don’t make trouble for the bosses, work out how you can be promoted to a higher level and then ask for that promotion, or ask for a raise. But take care, you need to give them a reason to agree to your request for money.
Just demanding it is no good, you’ll upset them.
Tell them you’ll work differently to earn them the money back and then you’ll get the raise you want. Don’t demand extra money for doing nothing. Look for opportunities in the work they do.
See how you can improve it and get them better results and then suggest that you will do it for them because you would like promotion and a slightly better pay rate.
You need to see it from their point of view. If you don’t work well, if you make trouble or are slipshod then they will be reluctant to give you a raise. Or maybe your income is governed by a set of salary rules. In this case, look for promotion to a higher grade, or find another job.
Very often, once they see your initiative they’ll find a different and better opportunity for you in their organisation. But if you are working for the kind of dumb boss or dead organisation that does not want to know, then you’ll have to leave.
Never be afraid to ask for a raise but always suggest how you can improve on the results in return for it.
Look, nobody ever said it was going to be other than hard work. I see you repeating this process several times over in reasonably short periods as you climb up the success ladder. Use every job as a stepping stone and a training course for the next one. I once had nine jobs in ten years, you may have to move to improve.
You’ll get wide experience this way. You are selling the most important thing in your life, yourself.
The kind of opportunities which come up in Recession:
Here is where to search for ideas to suggest to your bosses to improve their income and yours as well.
Look for any ideas which will help to save money for your employers. Their life is tough in the recession as well.
Maybe your firm can use less materials in some way. Suggest ways of saving money on the things they buy from outside.
Their money is often wasted when their activities are not well planned. Their money is wasted also when they must make rush decisions or change their minds too often.
Perhaps you might spot things which will make them less reliant on outside services, things which you and others can do just as well as part of your job now. Perhaps they are buying the wrong things, or from the wrong suppliers.
A practical example. A friend of mine in a low paid part time afternoon job, suggested to her boss that the company’s money was being wasted through having office lighting left on, and also having equipment such as computers left on stand-by overnight.
She suggested that she could work an extra hour into the evening until everyone had gone home, and then go round and check on the lights and equipment. They were delighted with the idea.
Three months later and after a couple more ideas like that, including one where the telephone could be diverted to her home phone so that any customers ringing in late could be answered, she was promoted to supervisor. She has gone on from there.
I know what you are going to say - you are going to tell me that you work for the kind of boss who does not care about these things, or who has no power to make the sort of decision you want. This is a case where you are going to either go upstairs to the big bosses with your ideas, and to hell with what your boss thinks, or you are going to leave and get a better job in a more responsive company. You’ve got a good story to tell them at your job interview, haven’t you? That gives you a head start over the other candidates.
Now to getting more money seriously:
In the end you’ll need to work for yourself. This is not as hard as it sounds. Start off the easy way, by picking some activity that you know well, if you can.
Talk with friends and others who are doing it already. Otherwise go to the reference library and hunt round for ideas.
If you can do something first in your spare time while you have a normal job. That way you will start small, with low risk and if it does not go right then all you have lost is you time and effort. Your first ideas will probably be no good. But everything you try will add to your experience.
Here are a few ideas at random, all stupid and not for you, I know, but to give you the flavor of what I mean.
One friend of mind has got an allotment on which she grows her own family’s vegetable and fruit. That saves her significant money each year by itself. She takes her surplus products and sells them on a stall in a market, and at boot sales. Later, she started to buy in goods from others and started a regular door-to-door delivery service. She was a shop without a shop.
Another went around her neighbours and asked if she could help them to sell some of the old things they had stored in their attics and did not want any more. She split the takings with them, and provided receipts. She only took things she thought she could sell on E-bay. This turned into a slightly more profitable business where she cleared attics for people and took extra rubbish to the tip for them.
Well, you say, they could take the rubbish for themselves couldn’t they? Yes, but they lived in nice areas, in nice houses, they had some money and they could not be bothered to do it. This later turned into a service she offered to small businesses, where she took old machinery such as computers from offices and got rid of them. When the stuff was too heavy for her she hired a laborer to help.
Another set herself up as an authority on solar heating, and saving electricity and gas costs. She would talk people through how to do it, for a fee. This turned into a good business when she did it for small companies. They paid better and they could not be bothered to do it for themselves. She studied the subject properly. She was a consultant earning quite good money within a year.
A painter and decorator I know, took evening classes to become a carpenter as well. He then set up a service for businesses in a district where he visited their premises every six months to do an audit and to find out what they wanted. Someone is always wanting some shelves putting up, or an office decorated. Later, his customers started to ask him to find suppliers and builders for special projects.
If you are already running your own business then here is how to make it a lot more profitable:
See if you can change it slightly to hit people’s needs in a recession. They are looking for safety first, for saving money, for improving their income, to pay lower prices.
If you are running your own business and are self-employed, then do two things. First of all get more high value customers and drop off the low value customers, work hard at sales - but only to profitable, no trouble, customers.
Next, raise your rates and prices. Aim for ten per cent, but do it in small bites. Do it to new customers first, get them on the higher rate, then you can do it to your existing customers particularly the ones who give you trouble. The only time you’ll lose customers because of a rate rise is when you don’t supply good service.
Take it nice and easy and give them plenty of warning. When you put up your prices try to build in some extra service or new product so they don’t feel so bad about it.
Don’t reduce your prices in the hope that sales will go up as a result. If you cut your costs by the amount of your price reduction, that is ok. This needs a true cost cut.
Look at your housing costs:
Now lets start making some money.
Don’t buy in a falling market. Wait until it turns up then if you are renting then you may find a way of raising a mortgage and buy your own house. But that only works in a rising market.
But at the moment you may find it more flexible and easier to rent rather than own. It may be profitable to sell your house, so long as you put the money into an asset which will improve. Such as you and your new business idea. Whatever you do, don’t spend this money you raise on a new flashy car, or holiday abroad.
Not right now perhaps, but remember that in the long run property and land will increase in value. It may pay you, if you’ve raised some cash to go back into the market at some time. Always keep your property investment small until you have built up substantial funds.
Never invest more than you can afford to lose if the market crashes. The mistake people make is to get too greedy and go for the big one. They borrow too much money, and spend all they have. The property drops in value and they are wiped out. But remember that in seven years out of eight this does not happen – the market will increase. Just invest what you can afford and don’t get greedy. Also learn your craft, do the research and don’t buy on emotion.
Then, when you have money to spare, you can start thinking about buying some stocks and shares and some gilts and fixed interest securities. You’ll get plenty of new advice at this stage. The old game will come back, bit by bit. But it does take time. a few years.
Tags: Business & Finance by Ali
No Comments »
