Is your business 'recession proof'?
Matthew Dashper-Hughes
Global talent acquisition | Leading international operations | Empowering growth and performance through coaching
What sets apart the businesses that not only survive recessions, but also thrive in them?
As a leader you probably want to make your business ‘recession proof’, but what does that even mean?
After all, describing a business as ‘recession proof’ is like calling the Titanic ‘unsinkable’ – it’s the kind of hubris that tempts fate into a cataclysmic rug pull.
?You cannot predict the unpredictable, so how do you ‘proof’ yourself against it?
At the turn of the century, the world was rocked by the events of 9/11, then there was the crash of 2008, and then, in 2020, COVID hit us.
There were a few (very few!) people who claim they predicted each of these things. Those people, at least in hindsight, look almost spookily prophetic … until you remember that there are plenty of people who predict doom and gloom all the time and (more often than not) turn out to be wrong.
Most prophets of doom aren’t even as accurate as a broken clock, which can at least claim to be right twice a day.
In real terms, almost nobody knew that 9/11, 2008, and COVID were going to hit and even those who ‘predicted’ that such events would happen weren’t right about the specifics or the timings.
Prediction would be helpful, of course, and we can see that recessions do tend to come around in a somewhat cyclical way, but precisely when and how hard they will hit is challenging to say.
Right now, though, we have an alarming level of certainty that we are facing serious economic turmoil.
The common element amongst companies that succeed (and even thrive) during challenging times is that they have a culture that is set up to be adaptable and to leverage the power of the full team.
These are cultures of ideas, innovation, and consistency, where every person feels engaged and pulls together so the whole becomes greater than the sum of its parts.
Many leaders like to believe that they have an agile culture that sets up their organisation for success in volatile, uncertain, complex, and ambiguous markets.
?If that’s you, that’s great.
?Respectfully, though, given that your success or failure as a business probably depends on it, there is value for even the most switched-on leader in constructively challenging yourself on whether your culture is quite as robust as you think (or hope) it is.
Refer to the vision, mission, and values of the company. Ask yourself honestly … are those values really translated into behaviours?
Do we really walk our talk?
Always?
Really?
Fundamentally, culture is not determined by a set of intentions that sit in a picture frame on the boardroom wall, it’s determined by the consistent actions of everyone in the organisation.
Those businesses and people that stay true to their values, stay focused, stay true to their mission of developing processes and people, always come out the other side of recessions many times better off than those that simply ‘wait and see’ what's going to happen.
Consistency is king – when all else appears to be undependable, having a set of behaviours, walking through the process, and staying focused, can be the difference that makes the difference.
When disaster strikes, business typically have one of three responses.
They’re the same responses that people have when under threat: fight, flight, or freeze.
If you’re attached to your process and stick to doing the right things, you find yourself able to respond to a situation rather than react to it. Instead of ‘fight, flight, or freeze’ you act in a measured and planned way.
?So, what’s the mindset that underpins this? Are successful leaders optimistic or pessimistic?
?Do they have a mindset of abundance or scarcity?
Unsurprisingly, the most successful leaders are those that look at challenging times and tell themselves things like, “A crisis is a terrible thing to waste” and “Every opportunity comes gift-wrapped in a problem!”
That’s not to say that they have an unrealistic ‘Pollyanna’ view.
When things start to get tough, great leaders see there is a need to step-up productivity and profitability, or maybe even recognise the sad necessity for cutbacks and having to reduce costs.
When these things happen, they also recognise and embrace the fact that a level of clarity and transparency is important.
As a leader you must be realistic, face facts, and share those facts with the team. Radical levels of candour and transparency breed trust - a culture of openness is a critical factor for people to galvanise as a team.
Your people have got to know the reality of the situation for them to believe in you as a leader. People are not mushrooms; they do not grow in the dark.
But you have to offer solutions too.
Clear goals and strong planning are essential to maintain an organisation-wide mindset of pragmatic optimism and to give everyone in the team a locus of control and a sense of agency.?
Plans must be behaviourally implemented – they must be based on actions that are within people’s control. Doing the core behaviours that are necessary for success, even when there is uncertainty in the market, means more consistency and predictability.
One of my own personal rules, which I remind myself of whenever I wonder why someone is doing better than me: the best-of-the-best are not better than you - they simply do the basics more consistently.
When times are hard you must fall back, more than ever, to using your system.
?As James Clear says in ‘Atomic Habits’, “people do not rise to the level of their goals, they fall to the level of their systems”.
?It’s always sensible, even in good times, to identify and qualify where and how you should spend your time. When times get difficult it is even more critical to use that qualification/ disqualification process. What activities are going to yield the best ROI? What are you spending your time on?
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That’s true for your own time, for the people on your team, and even for the clients that you choose to work with.
Beware taking on the wrong sort of work.
There is a risk, when times are hard, that you take on work that you shouldn’t take on, simply because there’s a perception that taking on ‘a client’ is better than waiting to take on ‘the right client’.
?Sometimes, although it may seem counter-intuitive, dropping a bad client can be the best thing for you to free up time and resources or to move on to more profitable deals.
Think about the clients you take on in the difficult years as analogous to investing the stock market; you're buying low and that's going to pay off when things go back up. Take on clients you want to have when the market recovers.
?If being that choosy sounds unrealistic, then there’s something wrong somewhere.
Does your business development/ selling process provide you with a solid enough pipeline of opportunities to give you choice? If not, review your marketing and prospecting activities and deliverables.
Good business development -good prospecting- is, in part, about giving yourself good options.
If you don’t have enough options to be choosy then the chances are you will take on low-value/ high-maintenance clients that will deliver sub-optimal profitability and will take up an inordinate amount of your time, distracting you from doing good work for the more profitable clients in your portfolio.
Sometimes business leaders in ‘freeze’ or ‘flight’ mode see marketing investments, training investments, and sales investments as ‘non-essential spend’.
?That is self-sabotage and it can really hurt you in growing your business.
That’s not to say that every bit of spend is essential. You need to look at ROI to decide which type of marketing or sales activity is worthwhile.
Invest in the right people and in initiatives that deliver replicability. Put any training investment into those people that have a high value and high potential and can become the ‘models’ of good behaviour. These are the people that are going to make the investments pay off for your business.
In terms of your team, it’s important to have the right people and give them the tools they need to be able to succeed. Always training and developing your people is key; they are the number one asset you have.
?The people are what makes every company grow, so growing your people should be a no-brainer.
?Work out who your good people are and invest in them. Make your strongest people even stronger rather than wasting time investing in your weakest people so that they might, one day, reach the heady heights of adequacy.
?In sales and marketing, which are very ‘numbers driven’ areas, it’s perhaps easier to identify where your top performers are … but make sure you’re measuring what they do, not just the results they get.
Look at leading indicators of success (behaviours), not just lagging indicators (results).
When someone in the sales team onboards a client, ask them what replicable steps they went through to win that client?
?Find out whether they really sold the product or service … or did a sale just land in their lap?
What practical difference did they really make, or did they simply take an order?
The hardest part about being a leader in good times is that very mediocre salespeople can look good. In tough times, though, it really shows who's able to do the job well.
The harsh reality of being a business owner or leader is that sometimes you must make tough decisions.
If you have people that don't want to grow and change, then, when the time comes to cut resources, those are the people that need to go and be successful somewhere else. It may sound a little brutal, but this could become an opportunity to have an upgrade in the team.
Finally, remember this…
In every recession, there is always somebody who is having their best year ever.
Why can’t that be you?
Don’t get me wrong, if you were running a hotel during the pandemic when virtually all hotels were shut down, you could rightly have pointed out to me that a question like that may not have been helpful for you.
As I said right at the outset of the article – claiming a business is ‘recession proof’ is like claiming the Titanic was ‘unsinkable’.
But generally, in every market, there is somebody who's seeing a better or different opportunity.
How do you set yourself up to be that person, and to be that business?
Focus on the culture, the systems, the behaviours that will facilitate an agile, responsive, appropriate, and smart way through.
Start with this:
Ask yourself this question, “why is this recession the best thing that has ever happened to my business?”
Get a blank sheet of paper and challenge yourself to answer that question.
Start writing. Don’t worry about what comes out of your pen to start with. Trust yourself. Something good will come.
You may be surprised by the creativity and innovation of the answers you come up with.
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If you found this article valuable and you would like a 1:1 session with me, DM me and we'll arrange to have a virtual coffee. This doesn't necessarily mean that you'll become a client of mine, but there's always mutual value in these conversations and, besides, every business relationship in the world started with two strangers talking to one another. I'm happy to talk.