Economic downturns are a fact of business life. However, those businesses that maintain a public profile – that stay in the public eye – are the ones that will have the best chance of surviving an economic downturn.
 
Hunkering down and waiting for the bad times to pass may not be the best approach so here are 5 tips to help your business ride it out.

1. Don’t panic – if you let panic take over, you won’t be able to respond rationally and constructively to the situation. Panic, largely emotional, has the power to destroy. You’ll lose the battle if you allow yourself to panic. You cannot afford to throw your hands in the air or to become paralysed by the fear of the situation. Take control. Take stock of where you are, what your strengths and weaknesses are and from there you can begin to build a solid strategy for your business to outlive and outlast a tough economic patch.
    
2. Spend wisely – while it might be tempting, don’t abandon your marketing spend. Rather look for ways that will maximise that spend, ways to amplify your messages through below-the-line and social media marketing and brand building. Box smarter, not harder. Use content marketing and storytelling to connect with your customers – people always relate to stories. Use online media to increase your visibility and forge relationships with your audience. You could also start a blog, write a newsletter and find other online ways to interact with customers.
    
3. Use the powerful multiplier effect of public relations – PR can be a high-reach tool to access your customers and other key stakeholders. The narrative generated by PR can reach your investors, partners and clients to create brand awareness and interest. PR is able to build credibility and leverage marketing spend. If you can’t afford an agency, establish who the key journalists in your field are and connect with them directly. If you go this route, be careful not to oversell your offering and always respect their deadlines.
    
4. Keep your message on target – this will help to position your business exactly where you want it to be. Focus on the positives of your offering – quality, excellence, stability, durability – whatever enables you to stand out from your competitors and makes your offering unique and valuable. Showcase the benefits of your product or services and present these from the perspective of your customer. Let them know the value that you add, not about discounts, in order to build a sustainable business that will survive the downturn and thrive during the upturn.
    
5. Focus on quality – quality is always a successful strategy; it’s what lasts the distance and wins in the long term. Never give up on producing quality. Don’t drop prices – focus on what sets you apart, what makes your product or service worth the extra cost. Price cutting is a race to the bottom that no-one wins. Stay firm, stay strong and build a solid base for the upturn, which will surely follow the downturn.

 
If others around you are cutting their marketing spend while you retain yours, you will be ahead of the curve when the economy turns, leaving them to play catch-up.
 
Invest in the future now and it will enable you to perform better later on.

An economy is called “open” if it conducts a significant amount of business (trade) with other countries – and this trade can be in physical goods or services.
 
There is a popular misconception that by reducing imports and supporting local production, jobs will be created locally, thus increasing a country’s economy, as measured by gross domestic product (GDP).
 
But such a policy would only lead to a downward spiral in the economy – we only have to look at the crushing impact of sanctions on the South African economy in the late 1980s and early 1990s when the country suffered a protracted recession, declining by more than 3% (annualised) at one stage.
 
To get an idea of the impact of economic isolation, let’s take an extreme example: let’s imagine an economy of one person. Imagine that each individual opted to produce everything they required entirely by themselves. This would include producing one’s own food, the utensils to cook that food, the stove on which to cook it, and so on. Imagine having to produce your own clothing, your own car, your own home, your own medication – anything at all that you require to enjoy the lifestyle that you do.
 
Clearly, we would spend most of our days just producing the basics for survival – and we would have an appalling standard of living and a dismal lifestyle. Thank goodness we don’t have to do that. Rather, we each specialise in producing something that we are good at and that is reflected in the salary that we earn – so we seek out the best salary that we can get.
 
We then engage in trade as an individual – we sell our skills and we use the income to buy those things that we can’t produce as efficiently. 
  
The larger the base within which we can trade, the greater the choice of goods and services we have available to purchase – and the better their prices. The larger the base within which we can sell our services (as a human resource) the better the price (salary/wages) we can get for our efforts.
 
Now let’s look at this from the point of view of a country. The more that a country trades with other nations, the GREATER the standard of living it can enjoy. By focusing on producing what it can produce more efficiently than other countries, and then
trading with other states, everybody can be better off.
 
China has proved this by becoming a manufacturing hub. Since liberalizing its economy in the late 1970s, the Chinese economy has enjoyed one on the most spectacular and enviable increases, taking the nation from the low-income category to its current middle-income status. India has become a significant developer of software, taking that country into increasingly higher salary bands.
 
South Africa has exceptional capabilities in several areas and it is these which we need to develop and exploit as much as possible. This will provide the necessary income to import those things which we cannot manufacture as competitively and, thus, benefit from having more.

Some of the areas where I think we should focus on are tourism in general, but also medical and sports tourism, the film industry and call-centre services. There is also need no reason why South Africa should not become the Financial-Services hub of Africa.
The same applies to aviation maintenance and repair services.
 
What industries do you think South Africa should opt to build and develop?

In an article last month in WSJ Blogs on the Four Ways Asia Can Avoid the ‘Middle-Income Trap’, Martin Vaughan notes the IMF's suggestions for the rapidly-growing Asian economies that are at risk of falling victim to the middle-income trap (MIT).

The MIT is a situation where rapid economic growth results in rising wages and a manufacturing industry that is no longer competitive on the global stage. These countries lag the developed economies, but have limited opportunities of extricating themselves from the situation. Wikipedia describes the typical characteristics of countries trapped in middle-income status as:
(1) low investment  ratios; (2) slow manufacturing growth; (3) limited industrial diversification; and (4) poor labour market conditions

South Africa is a perfect example of a country that has succumbed to the MIT, so I found the WSJ Blog both interesting and useful from a South African perspective. How can we benefit from these suggestions?:

Although South Africa has recognised this as a critical factor in advancing the economy, progress to date has been notably limited. We saw a massive spurt ahead of the 2012 Soccer World Cup, as we raced to complete the stadia and a few other projects on time, but we seem to have stalled since then. Speak to anyone in the construction industry, from quantity surveyors to builders, and the story is the same: the anticipated government infrastructure spending is failing to materialise.

There are essentially two types of foreign investment into a country: portfolio investment (buying equities and bonds as a passive investor) and foreign direct investment (FDI) (buying at least 10% of a company - a strategic stake - and playing a more participative role in that investment). Portfolio investment is less desirable, as explained by the IMF, investors often withdraw their assets "in a hurry"; FDI, by contrast, is more prized given that it is less volatile. But, there are problems with FDI too: income on those assets leaves the country as "income payments" on the current account and can intensify a current account deficit. So South Africa needs to assess the capital flows and their potential impact carefully.

Improving ALL education is critical for South Africa's potential to succeed. There are numerous surveys and rankings which reveal SA's complete inadequacy in literacy and numeracy. And in SA this is not restricted to the tertiary phase, but it goes all the way to the foundation phase. I would suggest that this is the single most significant step that SA could take to avoid the middle-income trap.

While South Africa does not have the same problem of an aging population, our population growth rate has shrunk to below 1% p.a. In addition, South Africa has bucked global trends by reducing the age for men to receive a state old age pension from 65 to 60, in line with that for women, putting us in danger of rising dependency ratios. Worryingly, it will be extremely difficult to reverse this move, even in the medium term.