How to Make Your Business Recession Proof

Talk of economic recession is dominating the headlines and this raises several significant questions, for example: how can I make my business prospects more secure? Is impending recession a time for more or less creativity? Are there different, specific techniques to use – or issues to consider – when developing business ideas against a sluggish economic background?

The threat of a recession can be a time to rethink and strengthen your business. New ideas don’t need to be expensive, just creative and effective, and this can be achieved by applying certain basic principles. In fact, sustained innovation can help a business survive and thrive during a downturn. More than that, a recession demands greater creativity. After all, the solutions of the past are unlikely to survive the pressures of a downturn. So, how do you make your business recession proof?

The first point is the most obvious but it is vitally important: prepare for a downturn constantly. If you run a careful, entrepreneurial business you will be much more competitive during the good times and much better placed to avoid disruption during periods of uncertainty.

Another valuable point to remember when preparing for a downturn is that there’s no magic formula for success, simply do the essentials well. If you are unsure how well you are managing the most important issues it can help to adopt a critical, questioning approach, this enables you to focus on the most relevant areas.

Clearly, managing the essentials is a task that varies depending on the size and nature of your business, but there are several ‘essentials’ that will apply to most enterprises. These include:

• Getting the right strategy and business model and then implementing them efficiently
• Showing leadership and getting people engaged, focused on clear priorities and pulling in the right direction
• Staying close to customers and taking care to stay competitive
• Managing costs, risk, finance and cash and focusing on profitability, not just revenue
• Using technology to attract and benefit customers, streamline processes, improve efficiency and reduce costs
• Innovating and striving to remain distinctive. Value and profit comes from providing something that is both wanted and scarce
• Thinking about the future in two ways. First, by considering where opportunities and threats may arise, and second, by balancing short and long term priorities
• Prioritising ruthlessly and do more of the right things, less of the wrong ones

Questioning is a simple technique that can be extremely valuable. Despite this, many executives and entrepreneurs are often afraid to ask themselves and their colleagues searching questions, perhaps fearing that it will expose weaknesses. Clearly, this is exactly the reason why it is valuable (and it may explain why ostriches make such poor entrepreneurs). Simple questions to ask include:

• What works and why? What needs to improve and how?
• What can I learn from others?
• Where are the greatest risks and opportunities?
• What are the priorities?
• What are the most important resources, how secure are they and what can we do to increase or strengthen them?
• What are our strengths?

When it comes to strengths and weaknesses there are two schools of thought. The first says that if the business is weak in one area then you should spend your time and energy improving the situation (after all, who wants a weak business?). The alternative view that I prefer is that weaknesses should be accepted, within reason; what is much more important is the need to play to your strengths and this is where to focus valuable resources. Of course, how you answer this conundrum depends on your business, situation and style.

Using questioning as a way to develop and improve the business links closely another challenge: the need to be self-aware, develop your skills and take personal responsibility for making the right activities happen. A large number of unsuccessful executives claim that they were overtaken by events, and while there will undoubtedly be circumstances and reasons why this may happen one suspects that some of the problems relate more to the individual, not simply their circumstances. The question is how can you best develop your skills?

This highlights the need to be flexible and dynamic, generating creative ideas and rooting out complacency. To identify areas for improvement, have you:

• Asked your customers for ideas?
• Talked to people in other areas who deal with similar issues?
• Talked to other companies? Explored how things are done in another industry or country and thought about ideas you can borrow, adapt or combine?
• Talked to creative people who may have different perspectives?
• Gathered a group together to brainstorm ideas?

If you are faced with a specific problem or challenge ask:

• If this problem was solved, what would the solution look like?
• What would radically change what you do?
• How could you reverse the way you think about the problem?
• How could you build on the current pluses and eliminate the minuses?

Also important is the need to look for ways to boost profitability. This can include developing pricing and marketing innovations, entering new markets, developing product extensions and making cost savings. It may also be worth considering new commercial options such as partnerships or new sources of capital. The unfortunate tendency during a recession is to cut costs, and if mishandled this can mean reducing capabilities, resources and the potential to compete. It is worth remembering that no one ever cut their way to growth, and if the business is well run it should be done only as a last resort.

Finally, strive to be open, trustworthy and innovative, even when it’s difficult. Employees and customers will respond well and your business will be much more likely to succeed.