What happens to your business when the economy tanks?
It depends which part of the market you serve.
And this is because economic ups and downs do not impact on all parts of the market equally.
In this podcast I outline which parts of the market you should consider targeting with your business.
Transcript
What happens to your business when the economy tanks?
It depends which part of the market you serve.
The impacts are not equal.
Avoid the middle:
The middle is the worst place to be in any market and doubly so when it tanks.
Entrepreneurs targeting the middle find themselves unable to compete with the bottom on price or selection, or with the top on style, status, or service.
They have no unique selling proposition to take to anyone.
The bottom is treacherous:
All the wars are waged at the bottom.
Buying rarely drops more than 5% to 10%, because the poor spend 90% of their money on necessities. Necessities somehow always get bought. But the profit margin goes away, as merchants battle over these consumers’ shrunken spending power with price cutting as the only weapon.
The sanctuary of the Top
At the top, buying also drops by 5% to 10% because they only spend a tiny percentage of their money on necessities. Economic movements such as Inflation is not important to the wealthy, they continue to buy not just necessities but whatever the devil they want, regardless.
Best yet for the merchants’ profit margins don’t have to erode.
Then there is the Uber Top.
Sales of big yachts, custom made shoes, designer-name wristwatches, corporate hospitality and the like increase, when the economy upheaves. All such businesses serving this niche do very nicely despite the turmoil. Some can even afford to travel private into space.
The mandate.
To fully earthquake proof your home on a fault line, may require moving.
Economy proofing a business does not necessarily require its physical relocation. Instead, it’s as simple as moving to a different, more affluent group of customers.
