Strategies for surviving the next recession
Thursday, November 21, 2019
Will we or won’t we? The verdict is still out on whether the U.S. economy is headed into recession sometime next year.
More worrisome at the moment is the number of other leading economies that are teetering on the brink of recession, such as Germany, Italy and, of late, Hong Kong. Growth is slowing in China and other BRIC countries. And who knows what impact Brexit will have on the European Union economies.
Directly or indirectly, any of these eventualities could impede our industry. While there is no cause for alarm at the moment, it’s always wise to be prepared for any eventuality. You can’t control what happens in the macro economy, but you can manage how it will affect your business.
In olden times, people built fortresses and castles to help them withstand adverse conditions. They made them so strong that many of them are still standing today. You can use the same strategy to help your business weather an economic downturn by building a strong team and network of resources to support your business.
The basic ingredients of what makes a strong team are well-known: respect, trust, consistency and loyalty. You as the head of the firm need to lead in all those areas and then ensure that they are being practiced by all the members of your team.
When staff perceive from your behavior that you value them and are fair and even-handed in how you treat them, and that you expect no less from them, they will pull together in the rough times to help the business succeed.
In addition, invest in developing your staff to make them even stronger. The more and more diverse skills and experience each one of them has, the more they can contribute to the firm and support one another. Plus, you will be able to delegate more, leaving you more time to work on business development and client management, which are critical in periods of decreased demand.
Along with strengthening your team, reinforce your network of resources. This includes vendors and suppliers, referrals, outsourced services, and alliances with other professionals and tradespeople. Maintain regular contact and be sure to thank them for their support and assistance periodically throughout the year.
In return, show support for them as often as you can. When business gets slow or you hit a snag in a project, these are the folks you can turn to for advice, a favor or a helping hand.
Finally, make sure your business’s financial affairs are in order. Minimize your debt and monthly obligations. Prepare alternative budget plans and cash flow projections so you can respond quickly if business conditions change. Set aside cash reserves or obtain a line of credit so you can cover payroll, taxes and basic expenses when incoming revenues are low.
Like a building, your business is only as strong as the foundation that supports it. Focus on the basics and practice good management skills. Having a sound team and resource network behind you will give you the flexibility to navigate the rough waters and get back on course quickly when business picks up again.
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