Webinar Recap: Making Your Business Recession Resistant – The Tools You Need to Thrive in Any Recession
It’s a trying time for businesses as the country prepares for a possible recession. Scaling Up Coach Wade Wyant led a presentation on best practices for preparing your business for drastic economic changes on the horizon.
As the founder of Red Wagon Advisors, a company that assists businesses with implementing Scaling Up, Wade is an expert in growing businesses into million-dollar companies. He successfully scaled his own company through the 2008 recession, and now works toward helping other businesses thrive in the face of challenge. Historically, recessions occur every 5 – 10 years, and since the last recession was in 2008, we are long overdue. So it’s time to start planning.
According to Wade, planning ahead is everything. Though daunting, it’s important for business leaders to start having conversations about how they will navigate the recession as soon as possible. Going into it with a plan of action in case of what-ifs is the best way to stay ahead of the curve. The best time to make big decisions for your business is before the panic hits.
Even the most successful business leaders are susceptible to the effects of a recession. So how do you go about preparation? Wade gave a handful of key areas to focus on.
Revenue generation is the first factor to review and reassess in your business. In Wade’s experience, the most common mistake businesses make during a recession is trying to experiment with their products and positioning. It seems like a good time to launch something new and make a few gambles on products you think will be successful, but the problem is that there is no safety net during a recession if plans fail. During a recession, businesses should be laser focused on their core customer, rather than trying new tactics to get new customers. You are more likely to get value out of your existing customer base that is already loyal to your brand than trying to tap into other markets.
While focusing on revenue generation, pay attention to not only your core customer, but your brand promise. Narrow down your niche and emphasize your most popular products in your positioning efforts. According to Wade, one of the best ways to track your success along the way is with KPIs.
Critical to focusing on that core customer, business leaders must identify and take advantage of their #1 channel, meaning how they reach these customers. You can prepare a perfect message, but if the right people don’t see it, there’s no point. Be sure that you know ahead of time not only who you are targeting, but how you will reach them.
Perhaps the most obvious area of focus for businesses during a recession is reviewing your PnL or income statement. Wade backs up Verne Harnish’s recommendation of adding a section to your income statement answering the question, “Who is responsible for this expense?” The obvious answer for most could be the CFO, but that creates a problem. Remember that during times of panic, it’s easier to feel burnt out. Business leaders need to balance the work they are putting on their team members as everyone will inevitably have more to juggle. Spreading responsibility for expenses across the leadership team will help balance everyone’s workload.
Businesses can go about making cuts by first identifying what they can afford to reduce. Wade recommends putting together a plan of implementation mapping out what “cutting back” looks like in your business. While cutting expenses is inevitable, a recession is the worst time to be making decisions for your business so it’s important to have this plan ready to go in advance.
The process of deciding what to cut is where you figure out your values, which may be different for different businesses. But what most businesses have in common is the value of their people. Wade says your people are your #1 resource, so how do you make cuts with this in consideration? In the last recession, Wade made the difficult decision to cut salaries of his employees. This decision was made with regard to the fact that his people were the greatest asset to the business, and lay-offs did not seem like the right answer.
While this was the best strategy for Wade’s business and ultimately helped them survive the recession, it might not be the best strategy for your business. It’s important to sit down with your leadership team, come up with a strategy to survive any future recession, and have a “why” behind your reasoning that reflects your values.
Finally, Wade says that to navigate a recession, business leaders need to remain focused on what is important. Because you will likely reach a point of burnout during this recession, it’s important to manage your time and energy and find a balance.
In preparing for a recession, Wade recommends several tactics discussed in his book, Wake-Up Call – uncovering an entrepreneur’s guide to achieving work-life balance while rapidly scaling their business.
To learn more about how Align can help you and your business get your ducks in a row to prepare for what’s ahead, book a demo with us today.
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