According to the International Monetary fund the Coronavirus pandemic “will cause a global recession in 2020 that could be worse than the one triggered by the global financial crisis of 2008-2009… one that could show signs of recovery only in 2021.” No wonder the news has not gone well with anyone globally; there is a sense of panic and grave concern about this dangerous economic recession.
Yet perhaps the worst thing about a recession is the fear it generates in the minds of people. Businesspeople are worried about their profits; employees are concerned about their jobs and the government is apprehensive about their political capital.
But, is a recession necessarily bad or unavoidable? Philosophically speaking, like life, the economy too is cyclical. Booms and busts are both phases of the economic cycle; it is irrefutable. Recessions are not predictors of doom. Some of the biggest and most successful companies in the world, including Microsoft, FedEx, GE, Revlon Cosmetics, and Hyatt, were started during recessions. From GE in the 1800s to FedEx in the 1970s, these businesses are still going strong.
All business leaders and managers must understand that during a recession panicking is the easiest thing to do. Panic, which is a fear-driven and not fact-based emotion, has a significant negative impact in all areas.
You don’t want to give in to panic and throw your hands in the air and get into a self-destructive mode. So, you must take an alternate route; rather than giving yourself to fear and flowing with negative emotions, you can consider the recession as a challenge. By this, you’ll be able to see opportunities, make the right choices and realize positive results.
It doesn’t matter which business you own or run the following are 9 key points you’d need to adhere to:
- Eliminate debts: If your revenues are falling, you must balance this by curbing your expenses. But more importantly, you must make sure you aren’t running into more debts. Austerity is the key to survival during the recession.
- Right size your team: If there are unproductive, or less productive workers now is the time to make them perform or give them their marching orders.
- Track finances daily: You must take over the reign of financial control and know the financial status on a day to day basis. In a recession, you have to rely less on your accountant and more on yourself.
- Reduce inventories: If you have inventory that has been stagnating in your warehouse for more than a stipulated time get rid of it by either returning it to the supplier or selling it to the customer. Never stock too much inventory in expectation for better margins albeit for the extended repayment period.
- Upgrade your staff: See if you can get your staff to do more productive work. If possible, train them or make them learn from each other. Having more skills is beneficial not just for organizations but also for staff.
- Focus on marketing: A significant focus must be laid on marketing. You need to find more clients while trying to make the best of existing clients. That’s the ultimate key to profitability during a recession.
- Focus on quality: When there are many suppliers the one with the best quality and price is often sought for. Ensure that you have the right price for your products and services and – more importantly – better quality than your competitors.
- Hold on to existing customers: Many studies have proved that when spending power diminishes existing customers were highlighted as the most important source of revenue growth during the previous recession. Identifying new business opportunities amongst existing customers often led to successful organic growth and revenue.
- Deliver excellent customer service: At any rate quality of customer service of an organization will determine the longevity of any enterprise. Being flexible and reliable to meet their requirements were cited as important strategies in retaining existing loyal customers as many others tighten their belts.