Business Strategy 4 Tactics Your Business Should Never Use During a Downturn
The economy sucks! Business sucks! COVID-19 sucks! Everything sucks!
Sound familiar? Let me let you in on a little secret: whining doesn’t help! And it won’t change a damn thing.
It’s true, a lot of businesses are experiencing tough times right now and a sharp downturn in business. There is no getting around that fact, but economic cycles are part of a capitalist economy. I’ve sees so many booms and busts over my lifetime I’ve lost count. This time, it’s due to a pandemic, last time it was a trade dispute. What will it be next time? I don’t know, but what I do know is that there will be a next time.
If you think this downturn is an anomaly, it’s time to give yourself a shake. This is going to happen time and time again, and you’re going to have to learn to deal with it.
During downturns, here are a few “tactics” many companies use:
Believe it or not, this is the go-to for a lot of companies. They accept what’s happening and wait it out. If you have deep pockets, this course of [in]action might just work. But let’s be realistic. The majority of businesses do not have large cash reserves, and playing the waiting game will bankrupt many and hamper the future of others by putting their business in a weakened state.
I hear a lot of this from people, and if your solution in whining, well, it’s just as effective as doing nothing and has the same results.
Cut, Cut, Cut
This is probably the one you hear about the most. It’s a combination of downsizing to conserve cash mixed with doing “nothing.” Cutting back is reasonable, and sometimes necessary, but when you cut, cut, cut, you’re going to the extreme. This course of action has a huge negative effect on the long-term viability of your business.
Companies cut employees, cut expenditures, cut important decisions, cut customer service—for what? To save money. These constant cuts will also frustrate employees who are trying to do the best they can and not given the tools to improve. Cuts will also delay important decisions that will weaken any competitive advantage that a company may have had. The world is constantly moving, and delays due to “cut, cut, cut” will put businesses behind in terms of competitiveness. Should they get through the downturn then they may be too far behind to be competitive—not to mention that when the economy starts to recover, these businesses will have a tough time getting good employees back and rebuilding their reputation after cutting so many workers as well as customer service.
Go Full Blast
Most businesses are uncomfortable with this, and for good reason. It can be a good strategy but the chances of failure are very high. Many of us have seen the failures. I have to say, it’s easy to sit back and predict failure when a company chooses to go full blast, because their course of action leaves no room for error. And if they do fail, we all pat ourselves on the back or congratulate each other on being right, basking in that all-important “confirmation bias” we like to have.
I’ve seen all of the above scenarios play out. I’ve watched some companies, believe it or not, combine all four methods in the same downturn. I’ve seen poor decisions, reactive decisions and more. It wasn’t pretty. And here’s the thing—the companies who used these four tactics have one thing in common: the majority of them are no longer around.
Modern Engineering is still here, and I believe it’s because of the way we deal with downturns. If my years of experience have taught me anything, it’s that the best way to deal with a downturn is to start working as if your company is always in a downturn. This way, your organization is prepared for anything.
So here’s what my many grey hairs and years of experience have taught me:
- Always look to improve the productivity of your organization. Keep trying to be better.
- Always be looking for good people. Good people get you through the good (no pun intended) and bad times.
- Always invest in your business. Do not let your business get behind. You don’t need to make large investments, but continual investments that increase your productivity.
- Always be putting money away for a rainy or downturn day. This is important because cash is always king. It is also important because, in a downturn, your company can still make important purchases and also weather the economic hardship.
- Always be innovating and don’t hesitate when it comes to change. This could be anything from adding new services to designing new products.
- Always be pushing customer service.
These are some of the ideas I try to run with, and guidelines many companies I know of have implemented and survived long-term because of. I truly believe that while they are difficult to sustain, these values will keep businesses alive and ready for anything. The key is to never let your guard down!
I have read so many books that talk about the innovative companies that are born out of recessions and downturns, and if you work like you’re always in one, just imagine where you’ll be.