Why some businesses thrive while others implode during economic downswings remains a puzzle to many entrepreneurs. Often, they mistakenly assume that all businesses must suffer through recessionary cycles. In reality, some companies are essentially recession-proof, and not necessarily because they are bigger, better-known, or more generously capitalised. What separates the successful enterprises from those that collapse during down cycles is that they are organised around a uniquely dynamic and healthier approach to the business cycles. They plan for the future and keep contingencies in place to confront whatever challenges might arise. They sell products and services that do not go out of fashion easily. Most of all, they focus on profits in an intelligent manner that helps them grow and prosper in any economic environment.
Here are some ideas for creating a company that will successfully weather an economic downturn:
- Set, measure, and monitor inventory targets, sales goals, and revenues – but make a profit, specifically net profit.
- Weed out unprofitable accounts and lacklustre ventures, services, and products. Reward top performers and ensure those who are not contributing are trained and counselled for the benefit of the overall team.
- Keep in close contact with customers and track their demographic patterns and consumer preferences.
- Develop strategies to attract new customers, retain existing customers, and sell more products and services to every customer.
- Advertise and market aggressively, but constantly refine and redefine the campaigns to strengthen the business and enhance the equity of the brand name.
The critical difference between response and reaction
Coaches often talk about the need to remain calm and aware under duress, so that instead of simply reacting randomly and haphazardly, one can respond with more level-headed and effective behaviours. If you have adequately trained and sufficiently practiced to meet a set of challenges, responding to adverse conditions is often relatively easy and successful. On the other hand, reacting to situations you are not prepared for frequently leads to knee-jerk reactions that are neither thoughtfully conceived nor effectively executed.
The difference between response and reaction generally boils down to deliberate preparation, prior planning, and intentional action. Emergency response organisations, for example, drill and train for the inevitable, when the fire erupts or a traffic accident happens, firefighters and police officers typically view the situation as another day at the office, because they have planned to react in an intelligent, effective, and professional manner.
One of the interesting things about response versus reaction is that once one reaches a certain level of training, instinctive behaviours transform from reactions into responses – and from reactionary to responsible. The first time a new fly-half enters a professional rugby game, it can be a harrowing and clumsy experience, but after some time and a little bit of repetitive practice, flawless responses become instinctual and subconscious. The blur of a defensive opposing backline rushing forward no longer inspires panic, but instead indicates openings downfield that can be exploited for territorial advantage or a score.
Similarly, when a business is planned with proper contingency solutions in mind, it can avoid missteps and bad judgments while capturing a greater market share. Experiencing an economic downturn only makes it stronger – by allowing it to put into action the concepts that it has been practicing all along, it refines and strengthens its approach.
Pro-active planning has been more prevalent than during the COVID-19 Pandemic. Whilst we are slowly clawing our way out of this hole, who knows what might come next – let’s be better prepared next time!
Pascal Pau, ActionCOACH Business Coach
Photo by BBH Singapore on Unsplash