Recessions Revisited
Thursday, May 23, 2019 at 10:00AM
What should you care about?
Recessions are back in the news. Some say we are overdue for one. Should we worry?
In the US, there have been 10 recessions since WWII — one every seven or so years. The last one ended in 2009 — about 10 years ago. So there’s a bit of a worry.
There’s no sign of remarkable new economic strategies to offset one. Geopolitics appear unstable. Politicians seem more erratic. There’s no sign of any statesmen coming to the rescue. In fact there’s no sign of any statesmen.
No recession does not mean no tough times
There’s been no recession in Australia for almost three decades but we haven’t gone from A to B in a straight line. In some quarters the economy has shrunk — just never the requisite two-or-more-in-a-row to meet the technical definition.
We’ve still had boom-and-busts in the mining sector and the chaos of the 2008 financial crisis. We are currently having a major meltdown in property prices.
Recessions are not the only cyclical worry.
There’s also the cycle of your products. They don’t remain fashionable forever. And what about the life cycle of your business. It may be an exciting start-up and if it doesn’t crash and burn there is a good chance it will grow into a mature entity. That takes a different management style. It will need regular reinvention to avoid decline.
The constant health check
In tough times, focus on lean tactics and process efficiency to survive but don’t lose sight of your business momentum. Maintaining it can help you get through.
Check the following:
Your infrastructure: what else can you do with what you’ve got. You might have developed a great sales team selling a great product. What else can they sell? Look for new product lines that build on your resources, your market presence, or your creativity.
Your industry: is now a time to work with the natural allies of your business? Can you buy customers? Do your suppliers make better returns than you? Are they such an integral part of your business that you should merge with them, or take them over, or be taken over by them?
Are you better off buying a competitor? Consider it. Examining an acquisition of another firm puts a creative spotlight on your own. You might simply find a better way of doing what you already do.
Your customers and your colleagues: it may be all about sales now – or the lack of them – but put some focus on maintaining customer relationships, not just transactions. Who will be with you all the way through?
The same goes for your people. They can be scared too. If you have a core of great staff, build on their loyalty. Look for non-cash ways to reward them. Help them with their career development. Make them a key part of both your recovery strategy and your future growth.
There may be a recession coming but tough times can also be opportunities. Keep prepared and keep perspective. Look for initiatives that leverage off the infrastructure you’ve got, in the industry you know, using the people you already have.
Reader Comments (3)
During the last recession -- stateside -- we tried to outlive the our competitors but most of them survived. What worked for us was using our logistics capability to market and ship products in a completely different industry. Logistics was our strength. Not our product.
We sell celebration gifts and hampers. Christmas, Mothers Day, Easter and Valentines Day are boom times. The rest of the year is pretty much recession.
After 28 years, reckon the next one will be the one we had to have.