Do Not Make This Mistake in a Recession Or When Times Are Bad!
Recession – The one word that puts fear into the minds of most business-people. It is being speculated that a global recession is just around the corner, based on the change in spending habits of consumers in the recent past and sales getting lower in many industries.
So assuming, it does happen, what should business be doing in a recession to survive and thrive?!
The number one thing is to have cash available. Cash is liquid and allows for quicker and swift decisions. Most of the companies that survive recessions are cash rich because they can bleed for a very very long time and still not die. The ones that don’t have any blood die quickly.
But there is one more mistake that companies make in a recession that makes it extremely hard for them to return to their original state, once the recession ends, even if they are not completely dead.
The mistake is that they contract in all areas. They cut back spending in every area, which automatically affects their sales. It’s like putting in very little fuel in a car, not spending a dime on maintaining it and and still expecting the vehicle to drive like it used to.
Yes, you need to cut back your spending in a lot of areas in a recession. You can longer splurge money on things that don’t create money for you. But don’t make the mistake of cutting back on things that directly impact your revenue.
For example, if employees are getting a ton of fringe benefits and spending is being done lavishly without a return, it makes sense to cancel those things. It may even make sense to cut your workforce, especially those who don’t contribute to your bottom line.
However, this is NOT the time to cut back on marketing. This is NOT the time to cut back on training and skill development of your employees, especially in areas that impact revenue.
You may change your marketing channel but you always need to be in front of the consumer, even if they are not buying now. Because they will buy one day and when they decide to buy, the first place they will check out is the company THEY ARE MOST AWARE OF.
You cannot cut back on training and skill development. Everyone is motivated when times are good. It is when times are bad that motivation is really needed. Everyone gets results easily when times are good. It is when times are bad, that selling skills, productivity skills, teamwork and leadership play a huge rule in sustaining the company and making sure it sails through the recession instead of becoming a failure statistic!
In Summary – To survive a recession, try to be as cash rich as possible. Cut back your spending on all areas that don’t impact revenue. But do not make the mistake of cutting back in marketing and training as these two things are to your business what food and water is to the living body! You can get rid of the fancy clothes, fancy watches and fancy bags, but you need to pile up as much food and water as you can!