Are You Recession Ready?

Australia has been lucky over the last few decades since the days of the recession ‘we had to have’. We’ve done well to dodge the worst of the global financial crisis and have experienced strong economic growth. 

However, the media has recently begun hinting that we’re clearly in recession. A survey by PwC has revealed CEOs aren’t at all optimistic. The economic slowdown that’s happening both locally and globally, plus political upset and trade conflicts mean the top brass in businesses across Australia have expressed lowered confidence in the country’s growth prospects. It’s not a matter of if the market will contract, it’s a matter of when. 

If tomorrow’s headlines screamed of disaster and consumer sentiment fell through the floor, what would happen to your business? Would you be worried or optimistic about the opportunities that were about to present themselves? Or worried about whether you would survive the C.R.A.S.H.?

Step 1: Cash Buffer

Stockpiling cash is easier said than done. While this step seems painfully obvious, an ASIC report recently revealed that 40% of business failures are due to a lack of cash flow. 

As your business grows, and your cash accumulates, somehow, you will find new ways to spend that money. Of course, many of those new expenses are legitimate running costs of your growing business. However, upon closer examination, you will discover that much of the new spending is on non-core activities.

If this is how you’re currently running your business, you’ll never build it into something profitable. It is impossible to keep track and every windfall will be very quickly spent. 

It’s best to squirrel some cash away right now, and get back to working out how to manage on what’s left.

Step 2: Reducing Costs

Proper allocation of your cash is just the first step. You also need to be able to significantly cut the amount that’s going out if you want to be fully prepared for a C.R.A.S.H. This doesn’t mean you should be cheap for the sake of being cheap. The last thing you want is to minimise costs to the point where it negatively impacts your brand.

What you need to do is have a thorough understanding of every expense involved with running your business and figure out which of these expenses can be eliminated or at least reduced. To do this, you need a three-step process:

1. Identify hotspots

2. Prioritise which ones to make cuts to

3. Incentivise the cuts

Step 3: Assets and Automation

Now you have eliminated costs, your next step is to consider that you’re paying your people for their time, and time is expensive. To ensure you’re getting the maximum returns from every dollar you spend, master the arts of both delegation and automation.

Automation will cut out a lot of the noise from your business and help save you thousands. It’s not a task for you as the business owner: your team should be able to discover and implement automation that saves time and money

Basically, an asset is anything that continues to produce new value if you and your team were to disappear. Imagine for a moment looking at your business from a distance. 

The right assets can make workflows faster, can automatically generate inbound leads, reduce the amount of time spent training a new team and have your business running like a well-oiled machine.

Step 4: Stand Out

One of the fastest ways to create a breakthrough in your business is to be recognised as the GoTo brand in your industry. 

This goal of becoming highly visible and well respected in your field should not be overlooked. This positioning as an industry leader makes every other key activity in your business cheaper and more effective.

There are five things you should focus on if you want to stand out in your industry:

1. Perfect your pitch

2. Publish thought leadership

3. Build a product ecosystem

4. Raise your profile

5. Strategic partnerships

Step 5: Get Help

It’s essential to have an ‘inner circle’ of suppliers and partners who can help you when times get tough. The key with this step however is deep diving into how YOU can help other people when times get tough. 

What products or services can you create and deliver that would help others survive the C.R.A.S.H.? Being able to answer this question will help you position yourself in a way that will help you keep the cash coming. You can also use the situation to not only keep the cash coming in and cement yourself as an authority in your field.

I’m hosting a virtual KPI Reset & Reinvent Workshop soon, where I’ll be revealing exactly what you need to be doing right now to prepare for the upcoming market changes. Click here to register for the next free workshop: https://bit.ly/kpiw-li