This economic recession is a game- and life-changer. So was the so-called Great Depression. For many, that downturn shaped the character of what Tom Brokaw called The Greatest Generation. Others couldn’t cope.
How can we each use this recession to grow — so that the richness of the our lives grows even when our resources may be contracting?
There are two errors I see people making. One is obvious – being a victim of circumstances. ”The economy won’t let me do anything, you aren’t helping, there are no jobs, I’m giving up.”
But the flip side is also an error: ”I’m going to muscle through, this recession won’t stop me from succeeding on my own terms!” That aggressive courage sounds brave at first, but it doesn’t prepare you to adjust and adapt to the reality in front of you. You can end up burned out from bravado and positive thinking, and disappointed at your results.
We take to these extremes when our world shifts. It’s human to look for something to hang on to, but both positions see the recession as a crisis. I am arguing that it’s an opportunity.
That’s what I mean by recession-proof thinking – thinking that is not reacting defensively to external forces, but coming from the best of who we are. Thinking that makes us more, and better, and improves our families and the world around us.
How do you do this when you are scared about your future?
I’ve written elsewhere on this blog (and here too) (in the height of the financial crisis) on this subject. Like everyone else, my thinking has evolved. I have more to say.
First – make sure you actively increase your resources to cope with stress. Take care of yourself, reach out to others, and keep yourself productive no matter what. (See this blog post for more depth here).
But right now, I think is the ideal recession proof strategy is becoming your own boss.
There is nothing like becoming the CEO of your own destiny to grow as a person. I was astonished, when I started my first business nearly 20 years ago, at how much my world enlarged. I loved it so much that I became VP for Entreprenerial Programs at the National Women’s Business Center, an SBA-funded program, where I could help others (men and women) be successful and fulfilled.
I still get chills when I see women and men who came through our Center adding employees, writing books, creating new lines of business, winning awards — mastering the life of an entrepreneur.
And I don’t necessarily mean abandoning your job. Or putting all your eggs in one business. I really mean creating “multiple streams of income.”
In the 5 years since I left that position, Web 2.0 has exploded. The tools to run a small enterprise (and create a good life for yourself) are at your fingertips. And the model of “social business,” of using business to improve society, is flourishing. I get chills too when I read that Tata Motors in India has created a car (and financing) that the world’s poor can afford. It’s the same chills I got when I met Muhammad Yunus who started banking for the poor and has materially changed life for millions of his fellow Bangladeshis (and others around the world).
The world is full opportunity. Where you sit, with your background, skills, passions, and desire to grow – you can use entrepreneurship to create an expansive life while you bolster your finances. The Greatest Generation may be the one that is born of these challenging times. Are you game to make it so? 
Tagged as:
coping with recession
Many commentators are encouraging business owners to REFUSE to participate in the coming economic recession.
I completely disagree.
Here is the reality: We ARE ALL participating in this recession because we are all alive and part of this world and economy we live in.
Those who do well in a crisis FACE reality head-on. It is common sense. It is also what responsible research has found.
Let me say it again: there “ain’t any stinkin’ positive thinkin’” anywhere to be found when you look at research on how super-resilient people handle crises.
HOW TO RESPOND TO THE RECESSION IN FOUR STAGES
Based on Kathryn Cramer, Ph.D.’s research on super-resilient people
Stage 1 has two steps that should be done simultaneously: FIRST: assess honestly how the economic crisis affects you — face facts — and start to brainstorm about what you need to do to protect yourself. DON’T RUSH INTO ACTION….but just come up with ideas. SECOND: Control any panic reactions you are having (remember that “we have nothing to fear but fear itself.”)
When panic reactions are under control — then you can look at your defensive ideas and start to implement them, stage 2. Failure to take comprehensive defensive early means the crisis can still drag you down. And you can start brainstorming about what you might do now that your old plans are out the window.
Once you have implemented your protective measures, you can start in stage 3 to make decisions about what opportunities or actions would be in your best interest to move on in life.
In stage 4 you start implementing your decisions and tracking your progress.
Positive thinking about real estate values and stock prices is a lot of what got us in this crisis. Realism is what is going to get us out of it.
For detailed techniques for each stage and copious research citations, see the book Staying on Top When Your World Turns Upside Down by Katherine Cramer, Ph.D., available through Amazon.
I’m concerned that so many small business owners are confident that the economic distress currently gripping Wall Street won’t spread to them. While optimism is the hallmark of an entrepreneur, it is exactly the wrong attitude to take into a financial crisis.
The first step must be to accurately assess the risks and protect yourself. Only then can you start creating your response to your new situation. What I want to get across in this post is that the likelihood is that the entire economy will contract over the next few years. Now is the time to define your safe harbor in the storm that is coming…and start moving toward it.
Forecasts I’ve read recently call for a severe two-year recession AND a dial back of the Dow to 7000. Since most forecasters missed the financial meltdown, I take these economic bears very seriously.
What follows below is a post describing a 12-step descent into financial hell in the American economy. Interesting, it was written in February of this year. The author, Professor Nouriel Roubini of NYU’s Stern School of Business, is the only analyst to have been bearish enough to be remotely right.
This full post is in the subscription-only section of his blog, but I repost it here. If you will slowly read through all the steps, I think you will begin to get a fuller picture of the severity of the situation we are in. And only then can you start devising realistic strategies for your own business and personal well-being.
12 STEPS TO FINANCIAL MELTDOWN
Nouriel Roubini
February 2008
(Notes are mine.)
First, this is the worst housing recession in US history and there is no sign it will bottom out any time soon. (Note: Check!)
Second, losses for the financial system from the subprime disaster are now estimated to be as high as $250 to $300 billion. (Note: Check!)
Third, the recession will lead – as it is already doing – to a sharp increase in defaults on other forms of unsecured consumer debt: credit cards, auto loans, student loans. (Note: starting….)
Fourth, while there is serious uncertainty about the losses that monolines will undertake on their insurance of RMBS, CDO and other toxic ABS products, it is now clear that such losses are much higher than the $10-15 billion rescue package that regulators are trying to patch up. (Note: bailout of AIG, bankruptcy of Lehman Bros. foretold)
Fifth, the commercial real estate loan market will soon enter into a meltdown similar to the subprime one. (Note: quiet so far)
Sixth, it is possible that some large regional or even national bank that is very exposed to mortgages, residential and commercial, will go bankrupt. (Note: Wachovia is the latest)
Seventh, the banks losses on their portfolio of leveraged loans are already large and growing. The ability of financial institutions to syndicate and securitize their leveraged loans – a good chunk of which were issued to finance very risky and reckless LBOs – is now at serious ri)sk. (Note: this is what the bailout/rescue is dealing with now.)
Eighth, once a severe recession is underway a massive wave of corporate defaults will take place. (Note: many of these are our clients.)
Ninth, the “shadow banking system” or more precisely the “shadow financial system” (as it is composed by non-bank financial institutions) will soon get into serious trouble. This shadow financial system is composed of financial institutions that – like banks – borrow short and in liquid forms and lend or invest long in more illiquid assets. (Note: the shadow banking system has essentially disappeared).
Tenth, stock markets in the US and abroad will start pricing a severe US recession (Note: recent sharp drops in the market.)
Eleventh, the worsening credit crunch will lead to a dry-up of liquidity in a variety of financial markets, including otherwise very liquid derivatives markets. (Note: further slowing corporate growth)
Twelfth, a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices will ensue leading to a cascading and mounting cycle of losses and further credit contraction. (Note: how a credit based recession that starts in the financial sector spreads to Main Street.)
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If you have stuck with it this far — please ask questions and make comments! I’d like to have a discussion that starts with a sober look at what is really going on.
