How to Beat A Recession-1 January 22, 2008Posted by David Dirks in Recession: How to Beat It!, Solving Business Problems.
The talk of the town is that dreaded ‘R’ word. I’ve been enjoying the economic and finance pundits who have plagued every talk show they can find. One pundit says that we are clearly not headed for recession. The other says we are already in one. Our federal government is poised to give all of us taxpayers about $100 billion dollars of money they don’t have. Just in the nick of time to keep us spending and thereby saving the day before and during the upcoming election.
So, whether we are already in one or headed for one, the question is, what should you do about it? What can you do to deal with it in your business? In order to even begin answering that, let’s start with the typical knee-jerk reactions to the “R” word. I came up with 11 of them but surely there are more out there.
• Knee-Jerk #1: “Cut expenses and fast.” Sure, batten down the hatches. Cut people we don’t really need. Chop advertising or marketing expenses. Cut the employee that makes the most money on the payroll and replace them with someone far less salary or don’t replace them at all. After all, this is war. Cut, Cut, Cut!!
• Knee-Jerk #2: “Cut back on customer services or conveniences.” Why not? They’re just “nice to haves” that are not necessary to insure survival your survival, right?
• Knee-Jerk #3: “We’ve got to raise prices!” Sales might go down so naturally you might consider raising your prices enough to make up the difference during the recession.
• Knee-Jerk #4: “We’ve got to cut prices!” Surely the logic of cutting prices so that you’re customers will keep buying even after they’ve lost their jobs or foreclosed on their home makes sense, right?
• Knee-Jerk #5: “Stretch out the accounts payables!” Not long ago I received a short, impersonal note from one of my customers who informed me that they were now taking the liberty of paying my invoices at 120 days from invoicing or tough nuts to me.
• Knee-Jerk #6: “No more investing in the business for now”. Forget that equipment that will help you improve your efficiency and productivity by a large margin over where you are today. Why take the chance if you don’t have to?
• Knee-Jerk #7: “I’ll just do more work myself”. Goes with #1 before and after the heads start to roll out your door. Sure, you’ll just pick up the slack just like that.
• Knee-Jerk #8: “I see nothing, hear nothing, and will do nothing”. Acting as if nothing is changing or will change is a strategy of sorts. Sometimes the “R” word is sets off such negative feelings that we might be forced to ignore it. Full steam ahead!
• Knee-Jerk #9: “Sell the business and fast!” If you have a marginal business to begin with, you might be thinking that a recession might just be the torpedo that sinks it. Sell it to someone who has “the dream” before you start taking on water.
• Knee-Jerk #10: “Diversify into another business or product line”. Your business is flat but you’ve heard all about this new hot product or service that generates instant cash flow. Not even remotely related to your business? Who cares? It’s related because it’s a ‘business’, right?
• Knee-Jerk #11: “Hold the line on new products or services”. You can’t afford to take the chance that the new products or services that are in your pipeline might flop, right?
It’s nice to have options when the “R” word looms nearby. Which ones have you been thinking about? Did I miss one? Email me at firstname.lastname@example.org and let me know.