Today, the financial world is reeling at the global market downturn that has come to be known as Black Monday. While it’s still unclear whether this is just a temporary stock slide or the beginning of something more portentous, it’s undeniable that many people are alarmed. #BlackMonday is a top trending topic on Twitter, and the front pages of most global newspapers feature alarming graphs that are all too reminiscent of those seen at the beginning of the 2008 financial crisis.
Of course, this wouldn’t be a Hiscox Small Business Blog if we didn’t give you the small business angle, so here are the top things you need to know about Black Monday.
1. How Did this Start?
The massive sell off of stock started when China recently devalued its currency, sending ripples throughout the rest of the global financial system. Here’s a great article on why Black Monday happened and how it’s happened before.
2. Self Financing is Your Friend.
While the United States is in the midst of a 6 year strong economic recovery, many of us can’t shake the fears of the 2008 global financial collapse. Back then, according to a 2012 Small Business Administration study, many small businesses were affected by the severe decline in lending from banks. Of course, nearly everyone has a bank account, but if you want to partially insulate your business from bank volatility, you could consider self financing your business. Check out The Joys of Bootstrapping Your Business for more details.
3. Unicorns Beware.
Startups with a lot of exposure to global financial markets may have some cause for concern. Unsurprisingly, these tend to be the ones with the most money. Tech Crunch defines startups that have made more than a billion dollars as members of the unicorn club. As WIRED points out, the entrepreneurs that built these mythical companies through venture capital funding might be at risk if Black Monday is more than just a blip and turns into a full scale downturn.
We’ll continue to monitor #BlackMonday and provide updates as they relate to small business here. Let us know your thoughts in the comments.