This may be controversial but I believe that preparing for a recession is something that every business should do, regularly, whether economic misery is on the horizon or not. Why? Because shifting mindsets, making constant improvements, and preparing for a future different to today are all vital for the sustained health of any business.
That said, some actions that are always desirable become indispensable when a recession appears. So, with this in mind consider which of the vital recession-proofing actions outlined below you could do more, differently or better?
Build relationships. Connecting consistently with customers, employees, influencers, stakeholders and the communities you serve is often viewed as routine, even mundane – something we all do, all the time, and so not worthy of any great focus. Always a dubious approach, in times of recession this is fatal. People value connection and communication, and what is needed in recessionary times is understanding, mutual support and connection. More than that, relationships build trust and help to develop and maximise opportunities. In recessionary times you need friends, trust and understanding.
Focus on customers – past, present and future. If relationships are important then a laser-like focus on customers’ specific needs is essential. It is tempting to look inward during tough times, when in fact many of the solutions and opportunities to build productive, lasting relationships lie outside. Find out what would help customers and try to give it to them. Do that when you are facing tough times yourself and you might make a friend for life.
Boost profitability and manage the business essentials. Cashflow, risk, debt, inventory, key metrics and profitability are just a few essentials that need actively managing during recessionary times. Counting the beans, however, is not enough: it’s what we learn from counting the beans, and how we use that knowledge to keep our beans that really matters. What are the key metrics that need managing? How well are you responding to those metrics? Where are the areas where action is needed – is it, for example, pricing, revenue per customer, your top three costs, or something else?
Improve efficiency, notably by empowering your people to make changes swiftly and easily, and by harnessing the benefits of technology. While waste is always undesirable during a recession it can be disastrous.
Shape the organizational culture and develop a strong team ethos. How? By engaging in two-way communications; being open and transparent, and recognizing that great ideas can come from anywhere. Incidentally this will also help you to benefit from your most decisive and valuable resource – your people.
Question, learn, and share that learning. This requires leaders to be curious and energised, open to new ways of working and ready to embrace change, as well as actively looking to maximise opportunities and discard those that are no longer top priorities. It also means learning from situations and people and encouraging others to learn. To this end coaching is a fantastic way to help people find the best way forward and, crucially, to be resilient when faced with challenges.
Balance longer-term vision and direction with short-term priorities. In recessionary times it can feel like we need to hunker down, focus on the short-term and get through it. That may be sound, but not if it comes at the expense of the future. For example, faced with rising costs and commercial pressures P&O’s CEO dismissed 800 workers. The problem was that this approach (and the manner in which it was done) trashed the brand and its reputation. Instead, encourage colleagues to keep in mind who we are (our values), where we are heading (our vision), why that matters (our purpose) and how we will get there (our strategy). Then make any necessary adjustments within that framework. The problem is that these guiding issues are sometimes forgotten or worse, they become butchered in a recessionary panic causing long-term damage.
Have a plan and prioritise ruthlessly. Sometimes tough choices are unavoidable, and they are even desirable if they enable the business to focus its limited resources on achieving progress ad securing a specific goal. The key point is that tough decisions should be made in a timely, effective way, but they need to lead to something or enable something to happen. Simply slashing budgets and crossing fingers is rarely enough: it only results in more budget-slashing and finger-crossing as the business enters a downward spiral.
However, don’t kid yourself that you will cut your way to growth, but don’t “cut and hope” either. Have a plan and then prioritise that plan, ruthlessly.
Finally, innovate, look for opportunities amid the turmoil and change, and remember: it’s all about the product. For example, manufacturing businesses can turbocharge their service offerings; businesses can refine their offers and the ways they add value; organizations can capitalise on adjacent market opportunities, different market niches, or entirely new markets.
All of these actions need to happen all of the time, and in a recession they can mean the difference between success or failure.
So, what are the priorities for your business?
