You Can Grow During Recession

As markets continue to fluctuate in response to the COVID-19 pandemic, leaders at businesses of all sizes might be wondering whether a recession is on the horizon. Despite a generally bullish picture painted by analysts at Goldman Sachs and other money managers at the start of 2020, many models now portray an extended downturn as a foregone conclusion.

While some geographic areas of the U.S. might be better equipped to ride out a recession than others — those with lots of jobs in less risky industries like manufacturing or agriculture, according to the Brookings Institution — nearly every organization would likely feel some effect. But that doesn't mean it's impossible for a company to survive, or even thrive, amid an economic slowdown.

So what can business leaders do to soften the blow of an economic downturn? These three steps are vital to a recession-proofing strategy:

Adopt a customer-centric approach.

Firms that take customer-first approaches tend to be more resilient when the economy takes a hit because they've already adapted their operations to reflect customer behavior. They're more in tune with changes in consumer demand and generally better equipped to anticipate customer needs and adjust operations accordingly.

Chen Amit, CEO of accounts payable automation platform Tipalti, cautions executives who might be tempted to wait for a return to the status quo. "Adapt your offering and message to current times," he says. "What does the 'new normal' look like, and what can you do to help your customers and prospects weather the storm?"

While business strategy often revolves around longer-term goals, a recession requires flexibility and a heightened focus on present challenges. Amit believes the most adaptable firms can uncover significant short-term opportunities. "Reassess your target market and refocus your team on businesses that can benefit from your product now," he says. "Discover what you can do for your customers and prospects. Everyone needs a hand these days — find a way to lend one."

Consider spending some of your cash reserves.

In 2002, McKinsey & Co. consultants noted that some companies emerged from the recession of the early '90s stronger. Among the challengers that became category leaders once the recession had subsided, a common theme arose: an appetite for spending.

While their peers largely halted mergers and acquisitions, these companies made more and larger transactions, ultimately allowing them to close the gap within their industries. Of course, following in their footsteps and going on a spending spree when everyone else is clinging to cash is possible only for companies with some built-up reserves.

That said, you don't necessarily have to be flush with cash to spend wisely during a recession. As spending slows and demand dries up, certain assets will be cheaper but perhaps no less valuable to your business. Sometimes, they might be even more valuable than extra cash.

If you can get the stimulus money take it. Money will probably not be as easy to get in the future and at this price. I would make this a priority if you haven't already. It may help you keep your most valuable people and make the changes you need in your business so you can survive until things begin to move again. 

Explore expansion opportunities.

As competitors fold, markets that might have been oversaturated can quickly become underserved. Similarly, underserved markets might be appealing enough to warrant relocation — digital or physical — or a foray into the development of new products and services.

Before business leaders move forward with product or company expansion, it's critical that they evaluate the needs of their current customers and the market at large. Moreover, they'll need to understand the workforce requirements that expansion often entails. In a recession, businesses might be more likely to downsize than hire, after all.

Fortunately, technology can sometimes pick up the slack when it's simply not viable to bring on new employees. Ultimately, the decision to pivot or leap into a new market will come with a price. Business leaders should do their research to determine whether the financial and time requirements of expansion are worth that price. And if the price is right, they shouldn't hesitate to make a move.

Larger companies aren't the only ones who can take advantage of a down market to gain market share. In Walker Deibel's book Buy Then Build, he shows you how, to begin with, a sustainable, profitable company and grow from there. With so many small and medium businesses closing or cash strapped, it's going to be a great time to expand and grow. 

While the future may indeed be unpredictable, savvy business leaders need not panic. Instead, by adopting a customer-centric approach, dipping into their rainy day funds, and considering digital or physical expansion opportunities, they can take proactive approaches in the here and now. Those that do will find that business growth opportunities abound.

Courageous Action Chat: Episode 4

Friday April 10th, 2PM-3PM PST 5PM-6PM EST

In episode 4, marine biologist and author of Blue Mind J. Wallace Nichols will kick us off with a thought-provoking tone-setter. We'll then be joined by Philip Brown, MD, who will give us an update from the front lines of the pandemic. He will share the new CDC guidelines and what we can all continue to do to protect ourselves. Rhett Power will then lead a panel discussion with Best-selling author and one of the top organizational development experts in the world, Dr. Terry Jackson and Richie Norton, author The Power of Starting Something Stupid. We will talk about what the recovery looks like and what we should be doing now as leaders. We'll then open the floor for questions and conversation. For those joining, we ask you "stay human" and keep your cameras on. See you Friday. 

Sign Up Now. Seats Limited:https://www.eventbrite.com/e/courageous-action-chat-episode-4-tickets-102210410088

Interview of The Week

In this interview and panel discussion, we discuss Leading Your Business During a Crisis. Today's experts Jennifer McCollum is CEO of Linkage, Inc., a Boston, MA-based leadership development company that works to accelerate purposeful leaders, advance women leaders, and create inclusive cultures. Henna Inam is an executive coach and the CEO and Founder of Transformational Leadership Inc. She is the author of "Wired For Authenticity." Charlene Li She's the author of the New York Times bestseller, Open Leadership, and is the co-author of the critically acclaimed book, Groundswell.

Rhett Power was recently named the 2018 Best Small Business Coach in the U.S., joined Marshall Goldsmith's 100 Coaches, and was named the #1 Thought Leader on Entrepreneurship by Thinkers360. He is CEO of Power Coaching and Consulting in Washington, DC, and hosts Power Lunch Live, one of the most popular business talk shows on LinkedIn's live platform. Check out his fantastic line up of guests and listen to past episodes at www.powerlunch.live.

If you enjoyed this article, here are a few other ways to connect with Rhett. You can read his regular columns on Inc. Magazine, Forbes, and Thrive Global. For speaking and coaching inquiries, please email [email protected].

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