It is a given that businesses run in a cycle, which means that if you have been enjoying a good time for your business till now, then rest assured that there would soon be a downturn.
An economic downturn… either minor or major would depend on how well-prepared you have been for it. Including taking stock of –
- Existing clients
However, in order to recession-proof your business, you need to keep taking stock of the issues mentioned above, not just when hit by the crisis but on a regular basis – weekly, monthly, bi-monthly, quarterly, and yearly.
In this article, we would discuss how organizations could prepare before, during, and post-recession.
Recession Proofing Before The Recession
Let’s admit the word recession does paint a scary picture. Probably because fighting an economic downturn could be taxing on your resources – talent and finance. Yet, certain businesses have beaten recession hands down and emerged as post-recession winners. So let’s understand what strategies you need to execute when your business is flourishing. But before that, it is imperative to know that an economic downturn doesn’t happen overnight. There are clear signals in the market, and while all of them are excellent indicators, they could be a little late in making them visible. These are –
- Increased unemployment rates
- Interest rates
- Consumer Price index or inflation rates
One of the primary indicators which the leading economists also swear by is the flattening of a yield curve – a line that displays the current interest rate environment based on bonds and securities. The steeping of the yield curve shows a strong economy, and a flattening curve indicates an economic downturn. So you need to monitor the yield curve closely and be prepared to shift gears as soon as you think recession might hit.
As one of the industry experts have said –
The key to a strong recession business strategy is to monitor the economic climate and pivot at just the right time without losing momentum.
If you are prepared for the economic slowdown, you would be able to breeze through it with little difficulty.
Recession Proofing During The Recession
Understandably, recession doesn’t paint a rosy picture, and there is a general trepidation related to it. The anxiety is more because of uncertainty among the workforce. This is where a business strategy leader could step in and help you in formulating a recession strategy.
Wait a minute; what exactly is a recession strategy…?
In simple words, a recession strategy is a plan that is executed to prepare for the economic slowdown, not when the crisis is round the corner but through the entire business practice.
So how does a business strategy leader could help an organization through all this?
Well, an experienced business strategy leader knows the importance of strategy framework to ensure that an organization is better prepared to stay afloat during recession and emerge as a winner post-recession. She knows which strategy framework out of the hundreds available would be suitable for your organization, and once the framework is finalized, she goes in for the kill with the strategies that would help recession-proof your organization.
She would not only implement strategies that would help an organization sail through the recession but also ensure that the company knows the strategies to avoid to have a fall through an economic downturn or slowdown.
Avoid these strategies during the recession if you wish to swim out of it successfully –
- Too much focus on the success achieved during the boom. What you achieved during boom time wouldn’t count during the recession. Economic slowdown needs recession strategies that help you deal with it successfully and lets you emerge stronger and better than before.
- Blame mindset is not for successful people or organizations. So stop blaming everyone around you for the economic downturn.
- Negativity would not yield the desired results. So instead of getting depressed and losing confidence in yourself and your team, use this time to lift each other up and work together.
- Taking the easy route of cost-cutting, retrenching without any plan is for losers. Winners always tread the untrodden path, and that’s how they create success.
- Destruction of hidden strengths of your organization like the culture and the people. The cancellation of any annual office even would only result in increased distrust in people.
Now that you know what strategies to avoid during the recession, develop policies to adopt strategies that would help you sail through the future recession periods. Also, find a straightforward approach to segregate these strategies into three main categories –
- Financial Management Strategies: reducing your debt, creating more cash reserves, and keeping your credit in good shape. The strategies also help you in investing wisely in the future so that you come out as a post-recession winner.
- Client Management Strategies: why it is not a good idea to rely on just one big client and ensure that your current customers are happy with your services, especially during an economic downturn. This strategy would also assure your clients that you are dedicated to your services and would stick with you through your difficult times.
- Internal Management Strategies: how your team is performing. An internal management strategy would help you in identifying the core strengths of the team and how you could use them to sail through the recession.
Having said that, here are five strategies that an organization should focus on while battling recession –
- Forging stronger relations with existing clients. Your existing customer base would ensure that you sail through the recession. So keep them happy and satisfied through improvised services. Talk to them about their fears and share your creative ideas to combat those fears.
- While being organized and efficient should always be your goal and strategy, it becomes all the more imperative during the recession. This is how you would ensure that you would forever remain at the top of the game and not lose out during the recession.
- Invest time in learning about new technology that would not only allow you to stay afloat during the recession but would also sail through it with efficient ease.
After The Recession
Recovering from the recession could be easy if you have been preparing for the downturn right from the time before the recession hit to the time recession hit your business. As mentioned earlier, the period just before the economy collapses through the period when it is in slumps is a period of challenges. The period calls for calculative thinking and smart decisions that would allow your business to stay afloat during the economic slowdown.
Here’s what post-recession winners do differently!
According to the research by Harvard Business Review, the post-recession winners are the organizations that mastered the delicate balance between cutting costs to survive the recession and investing in growing post-recession in the future.
The research also shared a fascinating insight into the organization’s chance of surviving recession and emerging as a winner post it. It revealed that the organizations have higher chances of survival (about 37%) if they implement a specific combination of defensive and offensive moves like –
- Reducing costs selectively by focusing more on operational efficiency than their rivals, and
- Investing relatively comprehensively in the future by spending on marketing, research and development, technology and new assets.
Some of the examples of post-recession winners include Groupon, Wells Fargo, ETrade, Netflix, and Citigroup. These businesses have deployed strategies before and during the recession that have ensured their growth post-recession as well.
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Writer, AI Geek, Business & Social Media Strategist. Top Writer on Medium. Passionate about technology and inspired to find new ways to create captivating content. Spent 10,000 hours in Business development and Content Creation. My area of expertise includes topics on Artificial Intelligence, Machine Learning, IoT, Data Science, Blockchain, and Business Strategy.