Anytime there is a recession, it is believed that there is less money in circulation. Business is slowing down and customers are not buying as much as they used to. This is the reality of many businesses. The disposable income of most individuals has gone down. Instead of spending more to stimulate growth, most businesses are cutting costs.
Many companies are laying off workers to keep costs down. This results in less demand for goods and services, which means fewer turnovers for businesses, which can trigger another round of layoffs. It is a vicious cycle. Individuals are also spending less in areas that will generate growth. Beyond what should be the right response to dwindling income, one question to ask is: ‘Where did the money go?’
We can understand what happened to the dollar supply due to the crash in oil prices since 2014. There is more naira chasing fewer dollars. What happened to the naira supply? Has 50 per cent of the naira in circulation left our borders also? Why is the naira not circulating around us as before? Why are sales down? Why does our wallet get to hold less naira?
The reality is that we feel there is no money because we are seeing less of it. The press is awash with tales of woe; companies are reinforcing the message by cutting costs and laying off workers. Individuals are also cutting back, scaling down and in some instances, doing without. There is a general sense of doom. There are very few voices of hope. The inspirational leadership required at times like this seems to be lacking while the stimulus package seems to be slow in coming through.
Getting out of recession
The first line of attack in getting out of recession is to have a positive outlook of the future, to have hope. Your mood influences your actions. If you feel gloomy, you tend to be pessimistic and lethargic; you pull back and in the process miss opportunities. When you have hope, you are fired up to take positive action. You are inspired to come up with new solutions. Franklin Delano Roosevelt is credited with ‘talking America out of the great depression’. Words are very powerful.
This is a season of unprecedented opportunities. You cannot see them if you are pessimistic. The unprecedented volume of naira that circulated during the 2015 election season has not left our borders. It is somewhere. Some may have been retrieved or seized by Economic and Financial Crimes Commission, but it is technically still in circulation as the banking system is virtually cashless.
How much money you have is now expressed as figures and digits in your account balance, and not necessarily the volume of cash in your bank’s branch. It is when you need hard cash that they move it with a bullion van. The economy is saturated with cash, but little is showing up in your account balance. That is the issue. With the right frame of mind, you can get to work and turn things around in time.
In addition to a mind-set shift, you need to upgrade your skills to be able to grow and attract more money. Your current skill set has brought you as far as you can go. To go further, you need to upgrade. One of the key skills you need is how to use other people’s money and other people’s time to make more money. Most of us lack business skills. We are afraid of entrepreneurship, and when we gather enough courage to step out, we jump in head first without doing proper due diligence. We lose our money and other people’s money in the process.
Moving from an employee to an entrepreneurial mind-set takes a lot of internal work, as both are essentially opposite. While the employee seeks security, the entrepreneur seeks freedom. While the employee looks out for himself (keeping his job) the entrepreneur seeks to grow his business and employ more people.
Entrepreneurship is more than putting aside some money and going into business. A stint in a business school helps but most of the training is on the street. If having an MBA was a prerequisite for succeeding in business, many MBA graduates would be successful entrepreneurs rather than employees.
Growing your business often involves taking on debt (unless you have very huge reserves). Debt is a good leverage and also a double edged sword. If you don’t know how to wield the sword, you can inflict a deep cut on yourself. The two sides of the sword represent two types of debt – good debt and bad debt. Good debt makes you richer while bad debt makes you poorer. Many think that good debts are debts incurred on items they consider as assets. Hence many borrow to acquire equipment etc. that do not end up paying for itself.
It is tempting to think that if I have this or that, I will start a business or expand my business. Many have found out otherwise through the hard way. Rather, it should be the other way round unless you are really sure of what you are doing, which is not often the case. Use what you have to start with, and as it grows and you have a handle on what you are doing, you can use the leverage of debt to speed up your growth. If what you are doing is already profitable, then it makes sense to borrow to expand it and make it more profitable. If all you have is hypothesis (if I do this, I will get that), then you are gambling with debt (and will get slammed with bad debt).
It makes more sense to start small and scale up gradually. Rather than look for money to buy land to go into farming for example, you can lease for a very small fraction of the amount and you are in business, and in a position to test your hypothesis. With a good handle on the cash flow backed by actual knowledge of the market, you can take informed decisions.
Nigeria is open for business, and if you invest in knowing what you need to do, you will be in position to see the opportunities and utilise them, using other people’s money (debt) and other people’s time (employees). The recession you are experiencing is your own reality. If you change your mind-set and step up your game, you will soon be on the path to growth and prosperity. It is different strokes for different folks.
We hope you enjoyed reading the above post. How about helping us share the information to your fans and friends on social media? Meanwhile, you can rely on us daily for the latest and relevant free forex trading signals, free forex trading market news, free forex trading technical levels, weekly Pool draws, latest news from Nigeria and the world, educational articles and quality academic information, insurance news and scientific knowledge.
Do you need a classical ORGANIST or an excellent music teacher? CALL Fabian on 08033983034 or email him at email@example.com
Follow us on twitter @newsbeatportal
Engage #SantexTech today to build & install inverters, training on inverters & other electronic designs, projects/kits. Call 08039574535
Click to join Talk Nigeria Today, a group where hot, controversial, and breathtaking issues are brainstormed upon.