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Jan
24
2008
Open Question: How Will You Survive a Recession?
Written by Steve Burge   
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Ecomony ImageOpen Question Thursday again:

Most people reading this blog make some money from the internet. For some, perhaps even a majority, its your largest source of income.

If a recession does come during 2008, how do you plan to ride it out?

  • Have you seen any signs of a slowdown?
  • Are internet companies going to be among those struggling or thriving?
  • Do you have any backup plans in case times get tough?

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Comments  

 
#1 David Towers 2008-01-24 09:48
Interesting question... In a recession, will those who's income is dependant on gaining money from Adsense go down? As the marketing budget is an easy cutback for companies, it could be the case. But then to some extent it depends on the market you're dealing with. Normally in a recession, it's those companies that provide luxury goods which suffer, because consumers cut back and spend on the necessary: mortgage, bills and food.

Conclusion? For those with adsense sites which discuss new cars for example, we could hypothesise that they may loose some income as the marketing budget for car manufacturers falls due to cutbacks... I'd be interested to know if this is the case or not!
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#2 Steven Johnson 2008-01-24 10:39
It is a very interesting question. I would say that those who work from the internet might be more recession proof. The more sources of work or income you have the better off you are.

If you work for a company and that company is having a hard time then you might get laid off. Your option is to find another job and that can be difficult in a recession.

If you work comes from freelancing and one of your clients is having a hard time then you have your other clients to call on. You will have a larger base of clients than if you work for a single company.

If you find you work from the internet then you have an even larger base of clients to pull from.

If you have adsense or advertising based sites then your client base is even larger. I have not seen the traffic drop for any of my sites. [Insert joke about SEO club not allowing the traffic to drop ;-)]

I think that the internet and websites are such an efficient way of doing business that a recession might hurt other industries more. I have one client that has approached me about setting up an email newsletter because the print costs are so expensive. They were excited to see how little inexpensive email can be.

I have not seen much drop in activity both in new leads and Internet traffic. Lets hope it stays that way :-)
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#3 David de Boer 2008-01-25 05:41
I do agree with the above posters! And I am willing to add, that I would have a humble income in a recession even if all my "website" clients went bankrupt (very unlikely).

That is because I have invested in subscription products. First of all there is hosting. A client will (80% of the time) not stop there hosting. Because (even during a recession) the believe a website will get theme more business.

Then there are the "Joomla Upgrade Plans", same deal. The wont stop a Upgrade Plan because they need the website to be secure. And I havent started about SEO, Back UP and other subscriptions that are more likely to be canceled.

So even if I don't get any new projects, I still have these subscriptions to work for. I would have to cut back a little, say NOT buy an iPhone when they finally arrive in the Netherlands, but he, Ill survive.
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#4 Steve Burge 2008-01-25 17:48
Great comments, thanks guys.

The key thing I take from all three comments is that you have multiple income streams.

This Steve Pavlina post is probably a great summation of those people who will really be in trouble if a recession comes:
http://www.stevepavlina.com/blog/2006/07/10-reasons-you-should-never-get-a-job/

Does putting yourself in a position where someone else can turn off all your income just by saying two words (
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#5 David de Boer 2008-01-25 18:06
Good qoute!
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#6 Steven Johnson 2008-04-05 09:56
Now that some time has passed since this question. I have another comment to add.

Make sure your clients are not effected by the economic slow down. You may still have work from your clients but make sure that your clients have money to pay you. :-)

We design sites for companies and some of them are starting to take longer to pay their bills. They have a continuous stream of work but are becoming slow to pay.

When selecting jobs you may want to look at the segment of the economy the client is in and their ability to pay.
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#7 Steve Burge 2008-04-05 17:25
Hey Steven

Thats very true. Collections is a very tough area for small web-design companies and I'm sure many of us are finding that its getting even harder.

Currently we rely on good relationships with our contacts inside our client companies, but it is possible that firms like ours and yours may need to consider things like requiring payment before work.
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#8 Zsolt Boda 2008-06-27 04:52
after the slowdown ice age. So who cares?! :-)
It is a spiral. Started with financial sector - property - job market - etc - etc. You can't escape :-) But have I mentioned the ice age already? :D
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