In New Zealand, industry analysts are saying that we’re mid-recession, and they're saying it will last some time. While it can be a windfall for some, recession for most is an opportunity in disguise … a very good disguise. In my experience, to see through that disguise and cash in requires solid planning with a focus on some key fundamentals.
The first fundamental I identified is sustainability. Make the decision to stick around, and get smart about the moves you’re going to make. Know your numbers inside-out; reforecast budgets and scrutinse cash flows; understand what impact zero or negative growth will have; and move fixed costs to variable costs where possible. I also learned it’s important to gather as much ongoing data as I could about the economic environment (current and foreseeable). If this means getting external advice, fine. Get it.
Once I made the decision to be sustainable, I started attending to the second fundamental: efficiency. In my experience, surviving recession means creating efficiencies and getting lean and mean. I learned to stick to my core business and refocus the short to medium term work plan on building rather than working the business. The resulting agility put me on track and in position to capture the third fundamental: opportunity.
Recessions present a grab bag of opportunities. One of those is the opportunity to grow market share. Industry always experiences a natural rate of attrition through recession, as other businesses go under or scale back. Businesses that are sustainable will stick around, using their efficiencies to absorb the extra demand when markets return. They’ll also be able to mop up some of the overflow that occurs in most post-recession labour markets.
Our domestic economy is just coming out of approximately eight years of sustained economic growth. The result is that many of our current clients had become less efficient in the top-to-bottom line transfer. Now, we’re scrutinsing everything, making sure our clients are all tidy, cutting the fat and getting them efficient again. If they maintain those efficiencies (and their business coaches will make sure they do!), they will be agile, vigilant and active enough to capture the slew of opportunities that a recession presents.
Securing a win for your business through a recession requires a long-term game plan. The key to that plan is a focus on sustainability, efficiency and opportunity. Stick to your core business and set up to go. That's where your money will come from in the longer term when the market comes back. And the market will come back. As we say in business, no matter how good it is, or how bad it is … this too shall pass.