Helping companies not only survive, but thrive has never been an easy proposition. In today’s market, the challenges of driving agility, resiliency, and growth are especially formidable.
After all, in recent years, the global economy has been rocked by the most significant public health crisis in modern history. It has been shaken by protracted lockdowns. It has been hamstrung by devastating supply chain disruptions. And now, the threat of a worldwide recession looms.
To navigate through all of this uncertainty, business leaders are faced with more challenges and opportunities than ever before. As such, there are things you can do to help shepherd your business through the crisis should a recession occur.
Plan Ahead and Make Decisions Now
When a recession strikes, the last thing you need is to be caught flat-footed. You need a game plan in place for every contingency, and that means that you will need to start making some critical decisions now.
As every savvy leader knows, all decisions have their consequences — both good and bad, intended and unintended. To ensure that your decision-making is sound in the face of a particularly challenging time, you need a framework to better help you define, visualize, and assess causes and effects.
A decision tree, for instance, can be especially helpful in making difficult decisions in complex and often painful contexts, such as a recession. By charting the likely effects of the various options from which you must choose as you endeavor to steer the company through the turbulent waters of an economic downturn, you will have a clear-eyed view of the path you have chosen.
Above all, you will have the opportunity to formulate a response to the effects of the choice you have made, which can help to mitigate any deleterious consequences before they even occur.
Assess and Prepare
Protecting your company at all times is part and parcel of leadership, but it’s especially vital when there are signs of an imminent global recession. Before the crisis hits, you need to take the time to engage in a comprehensive review of the status of your organization.
Consider all business functions and domains, but begin with the ones that will be the most immediately, directly, and negatively affected by a recession. In the majority of cases, this will mean assessing the company’s financial situation first.
Try to pay off as much of your company’s existing debts as you can while building up your financial reserves. This can help ensure you have a bit of a cushion when you’re facing economic uncertainty but the crisis has not yet struck.
Conduct an Organizational Assessment
When it appears that a recession is looming, it’s important to look for opportunities to streamline and go lean. Look for inefficiencies in your operations and do what you can to eliminate them swiftly.
This is also a good time to look for opportunities to partner up. Mergers and acquisitions (M&A) can be a profoundly effective way to weather turbulent times by enabling you to leverage one another’s most valuable assets even as you distribute, and thus dilute the risk.
For instance, if you have a few thousand feet of manufacturing space sitting idle and your prospective partner has a significant amount of cash in reserve, you can substantially boost their production capacity while at the same time feathering the company’s financial nest egg for the tough times ahead.
Continue Setting Goals
When you’re preparing your business for a recession, the key, above all, is to be both creative and pragmatic. Look for chances to innovate and evolve, but make sure that you pack your parachute well before you leap. In other words, be proactive rather than reactive, but always ensure that you have contingency plans in place should your plans go sideways.
Your company, after all, must continue working toward clear, specific, and beneficial goals if it is to grow and endure even in the face of a recession. However, a goal is nothing more than a pipe dream if you don’t have the plan to support it.
And it’s that plan, perhaps more than any other tool in your toolbox, that can give your company the nimbleness and the resiliency to emerge from the other side of a recession stronger than ever before.
In the aftermath of the economic devastation borne of the COVID-19 pandemic, the last thing business leaders and decision-makers want to face is another global recession. Nevertheless, this may be the reality we are all facing today. The good news, however, is that it is possible to take steps now to prepare your company for a recession, no matter when, where, or how it may strike.
By Indiana Lee, BOSS contributor