Avoid falling for the same mistakes that brought down companies in previous recessions — learn from the firms that made it out on top.
Companies that have survived past recessions share these common traits:
- A lack of denial. Many firms make the mistake of skirting around just how dire the situation is likely to become, which often comes back to haunt them. The most successful companies are up front from the start: “This our company’s situation now, and this is what’s likely to happen moving forward.” The same is true when it comes to relaying info to your stakeholders, customers, suppliers, etc.
- Immediate, decisive action. Not balking at the tough choices early on can pay huge dividends down the road.
Note: Always have several back-up plans in place to account for problems with your customers.
- Complete knowledge of profits and cash flow. Knowing which aspects of a business can be cut and which are indispensable is a characteristic of nearly all recession survivors.
- A good relationship with suppliers. In the quest to cut costs, some companies push too hard for better supplier pricing — effectively aiding in the supplier’s demise and hurting their own production line in the process.