Investing in Business During a Recession: Lessons from History and Opportunities for the Future

By: Laminar Live

June 14, 2023

Investing in Business During a Recession: Lessons from History and Opportunities for the Future

Despite enduring nearly 50 recessions, the U.S. has continuously navigated its cyclical economy, demonstrating that economic downturns often serve as catalysts for growth. The key to this paradox lies in viewing a recession as an optimal time to invest in one’s business.

Invariably, customer responses during these periods are consistent; once conditions improve, the tide shifts rapidly, leaving unprepared businesses in its wake. As we respond to the 2020 recession, companies should take heed of lessons from the Great Recession, particularly the importance of tech and software investments as shields against the economic downturn.

Take, for instance, Microsoft, Apple, Netflix, and Mailchimp. These tech giants weathered respective economic storms by investing in their systems, setting themselves up to benefit from increased consumer demand in the post-recession period.

During recessions, companies must adapt to leaner operations. This could mean adopting streamlined systems to manage time-consuming tasks like onboarding, payroll, attendance, and employee management. Upgrading system software can trim operating budgets and enhance productivity across industries, from software to manufacturing.

Moreover, businesses should consider custom software solutions tailored to their industry, current goals, and resources. The economic downturn, characterized by slow growth periods, offers an ideal time to design, test, and implement such systems. The icing on the cake? Tech tends to be cheaper in a downturn, allowing businesses to secure low-cost subscriptions.

Furthermore, businesses can leverage the IRS Section 179 tax deduction during these times. This provision allows for the full cost of purchased or financed equipment or software to be deducted from that year’s gross income, up to $1,040,000. With the extension of the 100% Bonus Depreciation into 2020, costs exceeding the initial limit can also be covered. This serves as a stimulus for businesses to invest and sparks economic revival.

Ultimately, recessions, though challenging, offer opportunities for strategic investment. Companies maintaining momentum or boosting it by investing in technology tend to emerge stronger, better equipped to handle the promising prospects of a rejuvenated spending market. It’s a strategy rooted in lessons from previous downturns, offering a blueprint for success in a future economy. In the face of an economic downturn, businesses should not merely survive but use this time to invest, evolve, and prepare for the rebound.

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