The looming uncertainty of an oncoming recession is nerve-wracking for business owners. But recessions, although distressing, are not a new phenomenon. History is replete with unforeseen downturns in the economy that have taught us how to best prepare for such events.
In a recent Forbes article, Dan Lambert, CEO of PathologyWatch, explained how companies can prepare for and survive a recession. Here are the strategies he recommends:
Have a Plan that Can Pivot Quickly
With so much unknown in the future, it might seem difficult to come up with a plan. But Lambert asserts, “Whether a pandemic, a recession or a shift in your industry is to blame, business leaders need to have a plan in mind before it’s needed.” Even if it’s just a “best guess,” an imperfect plan is better than no plan at all.
Harness Various Types of Funding
Another best practice is to diversify your sources of capital. “Secure access to private equity, venture debt, collateralized credit, SBA loans, EIDL and PPP because these are all strategic options at the right moment,” Lambert advises. And it is crucial to focus on funding that will keep your company secure in the long term.
Be Prepared to Scale Up and Down Quickly
Next, Lambert suggests that business owners should pre-identify essential and nonessential positions so that tough decisions can be made quickly if downsizing is necessary. Similarly, be prepared to create new roles when people need to be redeployed.
Gain Commitment, but Accept Disagreement
While some disagreement is a good thing for a healthy company dynamic, there can be a lot more disagreement during a recession, and having consensus is equally important. Make sure that, despite disagreements, you are able to get people to commit and move forward.
Dan Lambert points out that these strategies, in a way, involve reverting to a “startup mindset.” When the economy is unstable, this kind of agility is essential for a company to continue to prosper.
To read the full Forbes article, click here.