Winning In A Recession Ep 193

Summary Notes


In a candid discussion on the Gym Secrets podcast, the host explores strategies for gym owners to navigate a recession, emphasizing the importance of adapting expectations and redefining success. The host, alongside guest Mike Arcy, examines historical business responses to economic downturns, advocating for cost reduction, value increase, and acknowledging the role of market dynamics in success or failure. They categorize entrepreneurs into four archetypes, predicting that only those willing to innovate, work hard, and endure will capitalize on post-recession opportunities. The host encourages resilience and a mindset shift towards survival as the new winning, while cautioning against comparing oneself to misleading success stories on social media.

Summary Notes

Understanding Economic Fluctuations

  • Economic downturns can affect businesses regardless of their strategies or efforts.
  • The current recession reshuffles market demand, impacting businesses differently.
  • Success or failure during such times is not solely due to business maneuvers but also due to external economic factors.

"One of the nice reminders, just depending on what side of the coin you're on, to realize that it's not your fault if you're down. And it's also not your fault if you're up."

This quote emphasizes that economic conditions can lead to success or failure for businesses, and it is not always within their control. It serves as a reminder not to take full credit or blame for the outcomes during economic fluctuations.

Lessons from Past Recessions

  • Studying historical economic downturns can provide valuable lessons for businesses.
  • Companies that survived past recessions often made tough decisions, such as cutting costs and conserving cash flow.
  • Another common strategy was to cut prices while increasing the value offered to customers, requiring innovation.

"Now is the same as this recession. No. That we're in or about to go into. No, it's not. But there's definitely some lessons that we're taking from this that I figured I'd share."

The speaker acknowledges that while each recession is unique, there are still overarching lessons that can be learned from past experiences to navigate current economic challenges.

Redefining Winning

  • In a recession, the definition of "winning" may shift from growth to survival.
  • Managing expectations is crucial for entrepreneurs to maintain mental well-being.
  • Short-term successes should not be overgeneralized as indicators of continuous performance.
  • Surviving a recession can position businesses for greater opportunities once the economy recovers.

"And so I think redefining winning as surviving is very useful."

The speaker suggests that during a recession, businesses should focus on survival rather than growth as a measure of success, adjusting their goals to the economic reality.

Mental Well-being and Expectation Management

  • Entrepreneurs should be aware of the psychological impact of economic downturns.
  • It's important not to internalize market-driven difficulties as personal failures.
  • By redefining success, entrepreneurs can better cope with the challenges of a recession.

"I'm also saying this half to my community, is that the wins are many times isolated or they're in one off circumstances."

This quote highlights the speaker's intent to support the mental health of their community by setting realistic expectations and acknowledging that occasional successes during a recession are not necessarily indicative of overall business health.

Market Consolidation and Future Opportunities

  • A recession can lead to market consolidation, with fewer competitors remaining after the downturn.
  • Businesses that endure will likely face increased demand and opportunities once the economy improves.

"Here's the good news, is that for the entrepreneurs and the gym owners that get through this, there will be an outsized opportunity on the other side."

The speaker provides a hopeful outlook for those who manage to survive the economic hardship, indicating that perseverance can lead to significant advantages in the post-recession market.

Market Dynamics and Growth Opportunities

  • Gym owners have an opportunity to capture significant market share post-crisis.
  • Businesses that grow disproportionately during a crisis may face a subsequent disproportionate decline.
  • The example of toilet paper demand illustrates how a surge in consumption can lead to future reduced demand.

"And gym owners are going to very quickly be able to assume a lot of market share. And that's where you grow and where you get disproportionate returns and you get higher profit and higher growth than the rest of the market at large."

This quote emphasizes the potential for gym owners to rapidly expand their market presence and achieve higher profits and growth compared to the general market.

"Toilet paper all of a sudden, if everyone buys lots of toilet paper now, what are they going to do in the future? They're going to already have enough toilet paper, right?"

The quote uses the demand for toilet paper as a metaphor to explain the concept of market saturation and the potential for a decline in demand following a period of high consumption.

Entrepreneurial Archetypes in Crisis

  • Four categories of entrepreneurs are identified during a crisis.
  • Some business owners may not be suited for entrepreneurship and could be weeded out in tough times.
  • Entrepreneurs who rely on talent alone may either fail or step up and improve their business acumen under pressure.
  • Pressure can be a catalyst for growth, leading to entrepreneurs realizing and reaching their potential.

"I think on the bottom right of that would be somebody who probably shouldn't have been a business owner."

This quote suggests that some individuals may not be inherently suited for entrepreneurship, and a crisis could reveal this misalignment.

"But I think some people who are in this category may rise to the occasion."

Leila expresses optimism that some entrepreneurs who have underperformed due to relying solely on talent might step up their efforts when faced with adversity.

Self-Reflection and Work Ethic

  • Entrepreneurs are encouraged to self-reflect on their commitment and efforts before the crisis.
  • Hard work and dedication are necessary to navigate through challenging economic times.
  • Leila plans to engage more with the gymlers community by taking daily calls, demonstrating her commitment to providing value.

"Was I really trying as hard as I possibly could have before?"

Leila prompts entrepreneurs to question their previous level of effort and commitment, implying that there may be room for improvement.

"And if all of this sounds like work, it's because it is. And there's no way to not work through this."

This quote reinforces the message that hard work is unavoidable for success, particularly during a crisis.

Community Support and Word of Mouth

  • The growth of the podcast is attributed to word of mouth, not advertisements or sponsorships.
  • Listeners are encouraged to share the podcast with others to help spread valuable insights to more entrepreneurs.
  • Leila highlights the importance of community and karma in the entrepreneurial ecosystem.

"The only way this grows is through word of mouth."

Leila stresses the significance of personal recommendations and community support in the organic growth of the podcast.

"And so I don't run ads, I don't do sponsorships, I don't sell anything. My only ask is that you continue to pay it forward."

By stating her commitment to not monetizing the podcast through traditional means, Leila appeals to the listeners' sense of community and encourages them to share the podcast as a form of support.

Community Engagement and Value

  • Leila emphasizes the importance of providing value to the community to maintain engagement.
  • Addressing questions and concerns at a higher level is crucial for giving the community peace of mind.

"I'm going to try and provide more value to our community to continue to keep everyone engaged and hopefully answer questions at a higher level and just get everyone peace of mind, et cetera."

Leila discusses her commitment to enhancing the value provided to the community, understanding that this approach is key to keeping the community engaged and at ease.

Entrepreneurial Archetypes in Crisis

  • Four archetypes are identified in how entrepreneurs react to crisis situations.
  • The first two mentioned are "low performers" struggling before the crisis and "highly talented" individuals who adapt and level up.
  • The third type is the "winner" who consistently succeeds due to strong leadership and timely decisions.
  • The fourth type is the previously successful but now complacent entrepreneur who is unwilling to adapt.

"So those are two of the four archetypes, I think, that you have another archetype of person who's going to just be a winner, right? And winners win."

Leila describes one of the entrepreneurial archetypes as the "winner," who is characterized by their ability to thrive even in challenging circumstances due to strong foundational practices and decisive actions.

"There was a fourth category. I think it's the person who had that eye of the tiger, had a successful gym that was somewhat outsourced, but then is unwilling to go back in and roll their sleeves up."

Leila identifies a fourth entrepreneurial archetype as someone who once was driven ("eye of the tiger") but has become unwilling to put in the necessary work to adapt to new challenges.

Characteristics of the Four Quadrants

  • Low performers likely lack adaptability and entrepreneurial traits, leading to failure during crises.
  • Those with talent and adaptability as entrepreneurs are expected to rise and improve during the crisis.
  • Winners with strong communities and lean operations will likely consolidate market share and succeed.
  • Entrepreneurs who are unwilling to adapt and re-engage with their business are likely to fail.

"So if you had the four quadrants, you've got the low performer who's barely hanging on before this, who probably doesn't have the entrepreneurial character traits who is usually not adaptable enough, who's not a quick enough start, who does not pivot, who gets analysis paralysis, wants things to be perfect, is more security driven, and just honestly doesn't know what to do and can't lead through crisis."

Leila outlines the characteristics of the low performer in the first quadrant, highlighting their lack of adaptability and inability to lead in a crisis, which could lead to their downfall.

"Second category, people who are highly talented and then will be able to rise to the occasion and level up as entrepreneurs during this."

The second category Leila describes includes highly talented individuals who can adapt and improve their entrepreneurial skills during a crisis.

"Third category is the outright hardcore winners. Those guys will always win and they will make it through."

Leila defines the third category as the "hardcore winners," who are expected to navigate through the crisis successfully due to their inherent winning mindset and strong business practices.

Market Dynamics and Entrepreneurial Success

  • Market conditions significantly influence entrepreneurial success.
  • A great market can elevate a mediocre entrepreneur, while a challenging market can limit even a great entrepreneur.
  • Entrepreneurs should focus on controlling variables within their power and not blame themselves for market-driven challenges.

"And I think that that also would be the type of person who will not make it through."

Leila suggests that entrepreneurs who are not willing to adapt and work hard, even if previously successful, may fail to survive through challenging times.

"A great market with a mediocre entrepreneur will create a great business. A great entrepreneur in a mediocre market will create a mediocre business."

Leila quotes an old investment saying to illustrate how market conditions can have a more significant impact on business success than the entrepreneur's abilities.

"It's just things happen and we have to adapt. And so winning in a recession will look like for many people just getting through it."

Leila emphasizes the importance of adaptation and resilience during a recession, indicating that simply enduring through tough times can be considered a form of success.

Endurance and Adaptation

  • Enduring through a recession is a key strategy for entrepreneurs.
  • Success in difficult economic times may not be about significant gains but about survival and the ability to adapt.

"That's what you have to tell yourself. If you used to sell one out of three..."

Leila ends with the notion that entrepreneurs must remind themselves of the importance of endurance, suggesting that maintaining one's business, even at reduced success rates, is crucial during a recession.

Sales Skills in a Challenging Economy

  • In a tough economy, sales skills must be improved as the success rate of sales may decrease.
  • Transitioning from in-person to remote selling (via phone or Zoom) requires adaptation.
  • A decrease in the average sales ticket and an increased rate of rejection can be emotionally challenging.

"in person, you're going to have to level up your sales skills because you were selling one out of three in person in a good economy, in a flush economy, and overnight, now you're selling in a less familiar scenario over the phone or over Zoom, and you're selling in a bad economy."

This quote highlights the necessity for salespeople to enhance their skills to adapt to a new, remote selling environment and a declining economy.

Character Building Through Adversity

  • Adversity and rejection can lead to either a breakdown or character building.
  • Reframing challenges as opportunities for growth can shift perspective and aid in dealing with difficult times.
  • Learning from losses can be more educational than winning.

"And so what's going to happen? You're either going to crack or you're going to build a character."

The quote emphasizes that facing challenges in business can result in personal growth or failure, depending on one's response to adversity.

Reframing Success and Expectations

  • It's important to communicate to teams that the change in circumstances is not a result of their failures.
  • Redefining what winning looks like and adjusting expectations are key to moving forward.
  • Despite lower expectations, a strong work ethic is non-negotiable to overcome challenges.

"Winning doesn't teach us much, but losing sure does."

This quote suggests that there are valuable lessons to be learned from failures and losses that can inform future strategies and personal development.

Categories of Business People During Crisis

  • People who will struggle the most are those who have lost the willingness to fight and those unfit for business.
  • Those who are naturally talented or have always worked hard are more likely to succeed.
  • Willingness to work hard is a common trait among those who overcome difficulties.

"The guy who was talented and wasn't working hard enough and then starts to work, and the guy who always worked hard and was a winner. Both of those people make it out all right?"

The quote categorizes individuals based on their response to hard work during tough times, suggesting that both talent and effort are necessary to succeed.

Action as a Remedy for Anxiety

  • Taking productive action is the best way to alleviate stress and anxiety during trying times.
  • Encouragement is provided with the message to endure and believe in oneself.

"Because the only thing that's going to get you out of action alleviates anxiety whenever you are stressed."

The quote reinforces the idea that taking action, rather than being passively busy, is the remedy for anxiety during stressful periods.

The Reality of Business Challenges

  • It's important not to be misled by the outward appearance of success on social media.
  • Even industries with increased demand face challenges, such as staffing and supply chain issues.
  • Recognizing that every business has problems, especially during times of massive shifts, is crucial.

"Don't be fooled by people's posts. No one is going to be absolutely murdering it right now, independent of industry."

This quote advises against comparing oneself to others based on their social media posts, as all businesses are facing challenges during economic shifts.

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