An economy in recession is a challenging time financially for everyone and when income drops, many suddenly become accountants (no disrespect intended), focusing solely on cutting costs and making do with less. There is nothing wrong with cutting costs, especially where there is room to eliminate waste. More than a decade of economic boom had made us complacent and consumption-driven. Expenses that do not generate income are bad expenses (liabilities) and ought to be minimized (as a ratio to income) no matter how important they are.
Folks have become creative with cutting costs, and you read about it in the news. Some people have relocated to cheaper neighborhoods, moved their children to less expensive schools, do without some things, and become DIY (do it yourself) experts overnight – car servicing, sewing, home repairs, etc. Our fuel consumption is down and there seem to be fewer cars on the roads. Many have embraced carpooling. Some companies have laid off staff. A friend of mine changed banks recently because the bank she used before laid off staff, letting go of their best hands and leaving behind a bunch of clueless individuals who muddle up simple instructions.
Is cutting costs the best response to dwindling revenue?
Most people think so. Cutting costs for the sake of survival leads you nowhere. You are simply maintaining the status quo with a lower cost profile. If you are going somewhere, you need to be making progress which means growth. You need to be able to survive to make that progress no doubt, but when all you focus on is survival, you miss out on opportunities for growth
I often use a football analogy to illustrate my point. If your defense is under intense pressure, falling back to defend your half of the field is not always the best strategy. When your 18 box is overcrowded, the chances of a defensive error and an own goal increase. Counter-attacking forces your opponent to fall back which relieves pressure on your defense, hence the saying ‘ attack is the best form of defense’. In a recession, your income is down and your finances are under ferocious attack. If your sole focus is on defending (cutting costs and tightening your belt), you box yourself into a corner. You end up spending your time lamenting, lashing out at loved ones, blaming the government past and present, the economy, the oil cartel, your bosses, and anything that moves. It may make you feel good but it changes nothing.
Most discussions nowadays center on who to blame for our current economic woes. After the blames committee has concluded its hunt for the guilty, assigned all blame, and submitted its report, what next? After wasting precious time and energy blaming, we lose sight of the fact that the impact you are experiencing is a reflection of your lack of preparedness. You may blame the government for allowing it to rain on us the way it is doing but you have yourself to blame if your umbrella has holes. Everyone is not affected the same way by this recession. There are no politically exposed families who are still maintaining their standard of living irrespective of the recession. There are those who are making more money. It is different strokes for different folks.
You need to counterattack.
Defending alone (and blaming the referee) may get you so far but you cannot win the tournament if you don’t score goals. Cutting costs is important but we need to launch out and do something that will move us forward. It is different for each individual. We each carry a dream in our heart, something we intend to get to do someday when (insert your excuse here). Maybe that someday has finally come. Write that book, song, movie, cartoon, or software, create that invention, and start that thing. Many Nigerian programmers are doing fantastic things and Silicon Valley is starting to take notice. The government did not create Nollywood. Other sectors are about to take off.
Many will say I don’t have the money. What you lack financially can be made up by creativity and ingenuity. In the information age, you don’t need a lot of money to start something or get on the internet. Justin Bieber became a sensation (not overnight) by uploading his music videos on YouTube. Many have experienced breakthroughs through unconventional ways. As an upcoming musician, you don’t need to sleep at the door of producers to get an audience or waylay people at car parks to make ends meet. There are platforms you can showcase and sell your music online. The challenge most of us have is that we have industrial-age mindsets that are holding us back. Go to school, get a job, and wait for the government to fix the economy. What you need is already inside you. You don’t need money to change the world. Your idea can attract the funding you need if you go to the right places. The economy does not have to change before you make your move. Actually, it is cheaper to start a business now than when the economy is booming.
The challenges we face demand new thinking. The old ways of doing things will not cut it. The world we once knew no longer exists. In today’s world, you can leverage technology wherever you are to showcase to the world what you have to offer. You can produce in Nigeria and sell to a global audience via the Internet. As a writer, you can write an eBook and sell it globally without leaving your house. Folks are exporting a lot of stuff. I was speaking to a customs officer the other day who told me that imports have dropped sharply and it is exports that are keeping them busy at the ports. A Chinese proverb says ‘those who say it can’t be done should not interrupt those doing it’. Instead of lamenting about the naira to the dollar exchange rate, you can earn your own dollars here and do your own thing. If you make enough dollars, the rising price of things does not affect you because you have enough naira to play with.
It may sound impossible to you at first and you may come up with excuses. If you pay the price in studying and thinking through, you will find a way forward with your goals and dreams. Discuss with those already doing it, and work with them to learn if possible. There is someone somewhere already doing what you want to do. Be humble enough to learn from them rather than stay at home and propound theories to support your inaction. Times may be hard, but this may be an excellent opportunity to propel you toward your dreams.
