The 2024 recession is one of the most pervasive economic downturns in more than two decades, and business owners are fighting for their financial lives amid rising wholesale prices, supply chain backups, the high cost of fuel, and a lack of qualified workers. Front-line entrepreneurs are using traditional techniques and a few new ideas to lessen the negative effects of the recession. Their goal is to stay in business long enough to weather the storm and survive as a going concern well into the next decade.
But, can they? As Q3 comes to an end, it’s already apparent that the bad times will almost certainly stretch into next year. Contrary to what politicians said back in the early part of 2024, inflation is not transitory.
That means owners of small businesses are continuing to operate in emergency mode and use every trick in the book to remain solvent. Tiny, one-person entities are popping up everywhere, in industries that formerly only accommodated large corporations. The year’s third quarter has witnessed an alarming rise in extreme budget cutting as well.
The savviest entrepreneurs are taking out small business loans to get through the rough times and keep sales and profits on target. Since midway through the year, many owners have begun cutting costs to the bone, offering permanent discounts, and adding aggressive advertising tactics to their arsenals. Since 2020, there’s been a surge in the number of micro companies in industries where medium-sized and mega-corporations once dominated the scene.
As 2024 enters its final months, the most noticeable commercial trend is the immense popularity of tiny enterprises, ones that are often one-person or two-person operations. Many are side businesses or family-based firms created for the sole purpose of supplementing personal income. For individuals, couples, and families in all income brackets, micro entities represent a viable way to work from home in dozens of fields.
Right now, some of the most profitable micros include e-commerce stores, resume writing services, tax preparation companies, website design firms, and tutoring businesses. Perhaps the most frequent tactic used by smart entrepreneurs in 2024 is applying for small business loans. One reason that such loans make good economic sense is that anyone can apply here to get funding for a new company.
As the COVID pandemic’s widespread shutdowns eased earlier this year, many founders and owners applied for loans to jumpstart their businesses. The recent surge in inflation has affected both wholesale and retail prices, and owners of small and new companies are discovering the multiple benefits of using loan proceeds to cover all the varied expenses that come with operating an organization of any size and in any industry. For many, taking out a loan and repaying it in a timely manner is the most effective way to build business credit in an economic environment that is one of the most challenging in a generation.
The growth of enrollment in trade schools and specialized training programs is a direct result of the recessionary pressures in Q3. Stand-alone schools that teach courses for prospective securities brokers, real estate agents, and massage therapists are experiencing sharp upticks in applications. Other fields in which training courses are booking full online classrooms include career counselors, IT technicians, classroom teachers, life coaches, and resume writers.
Personal services are particularly popular choices for semi-retired or middle-aged adults who want to change direction and take on a new kind of job. All the beauty and bodywork services are currently enjoying an influx of new talent, including nail techs, hair stylists, and estheticians. Organizations in all fields are finding that extreme budget cutting is one of the most powerful ways to reduce costs and maintain current profit levels.
But the technique comes with its own set of costs, including fewer employees, moving out of office space, and working from home, outsourcing dozens of tasks, cutting product lines, and equally painful changes. In the nation’s most populous markets, owners are doing everything they can to last through what they hope will be a short recession. As a last resort, some raise prices on their goods and services.
The risk is that consumers will go elsewhere or simply stop purchasing the item altogether until the economy rebounds. The restaurant industry has been especially hard hit as most of the national chains have been forced by corporate owners to raise the price of all menu items. Results are spotty, as some chains have suffered drastic declines in sales while others are still chugging along at break-even profit levels.
A trend that began in 2008 and then faded is making a fast comeback in late 2024. The shared office space concept was still new when the 2008 financial crisis hit, but today’s entrepreneurs and owners are rediscovering the unique way of paring rental expenses. Sharing is more workable in some industries, but it’s catching on everywhere as merchants’ team up to pay for monthly leases on space that they agree to share throughout the work week.
The trend is especially evident in niches like medical services, office work, financial firms, and other non-manufacturing sectors where similar kinds of companies can occupy the same building without rearranging furniture or modifying equipment. Common locations for space sharing include strip malls, large commercial buildings, and stand-alone offices. There are ways to make an office move fun so that employees don’t feel like this is a downgrade or a chore.
The third quarter of 2024 leads directly into the holiday buying season. That’s just one of the reasons large numbers of retailers engage in recession induced advertising and marketing campaigns. Not since the 2008 economic meltdown have sellers offered larger discounts on goods and services that typically don’t get marked down more than 20%.
Once November ends and merchants go all-out to boost annual profits, it’s likely that some of the huge markdowns will become permanent or last until the recession is over. More than a few of the largest retail chains have already coined a new term, recession sale, to denote heavy discounts and special deals on a wide selection of products.
