“Do you think we’re about to go into recession? How’s that going to impact?”
I’ve been getting asked this a lot by the owners and CEOs of companies I work and interact with. And honestly, if the professionals in the FT can’t consistently call it, I’m pretty confident I can’t.
So I’d rather figure out what to do than guess where the world economy is going. And figure out now, rather than when the papers all confirm that it actually has happened (if it is).
For me, it’s about responsibility and it’s about opportunity.
First, you need to protect against the threat. You need to be very aware of your responsibilities to your employees and anyone else who depends on your business. That frame of mind means you won’t instinctively lurch to “letting people go” (the most disingenuous phrase – sounds like we’re giving them freedom rather than cutting off their livelihoods).
So first steps:
1) Identify trigger points for action – whether they’re sales funnel, cash flow projections, or whatever’s relevant for your business – what values of which indicators will mean you need to take action? Plot out more than one level.
2) Based on those triggers being hit, what action should you take at each level? And how do you keep your priorities on above the line (i.e. revenue) and truly expendable costs, rather than people?
In terms of revenues, remember if you’re an SME that it doesn’t take many clients to make a significant impact. So I’d look at focussing harder on more direct routes to market which might yield more near-term results. It may only need 2 or 3 new clients to completely change the picture for you.
3) Brainstorm opportunities that this shape of recession may open up. Keep them ethical – there will be genuine needs to help both consumers and companies based on what might happen.
Will cost differentials in product mean that you can be more competitive in an area that you hadn’t considered before? If you can drive revenue, will there be people out of work for whom your company can be a good home? Are there new needs where you can help people which perhaps weren’t there before? Are there sectors which might be more immune, and where your solutions / products would be a good fit?
The benefits of doing this from now means that you’ll be in a position to act before things turn too sour, and that you’ll be more considered should challenges arise rather than having a knee-jerk response.
Most importantly, just the process of going through the thinking will be invaluable if recession does actually bite. You’ll just as likely not have predicted the actual scenarios as they unfold, but you will have flexed the muscles you’ll need at that point.
Today's economy and environment is full of uncertainty and opportunity. Are you confident in you and your leadership team's ability to build and control your business going into 2023? We're looking for a group of 5 CEOs (10 to 100 employees) to join us on this workshop to talk through how to make your strategy, purpose and values happen. Join us.