Doís and doníts of the downturn
How to survive the recession and position your firm for the recovery
The global economy is suffering its longest downturn since the Second World War. And while CPG/retail may be less susceptible to recession than many industries, most industry companies can expect little or no growth for months to come.
That said, there are things you can do to ensure that you not only minimize the harm of the recession, but also position your firm to capitalize on opportunities provided by the downturn.
Here are 10 principles to guide your actions in the coming months:
Check the patient. How bad is it? How bad can it get? What effect will a 10 or 15 percent drop in volume have on your division? ďConsider which scenario is most likely to unfold in your industry and your business based on available data and analysis,Ē write David Rhodes and Daniel Stelter in the Harvard Business Review.
Stop the bleeding. Optimize your balance sheet by reducing costs and increasing efficiency in ways that do not undercut your long-term capacity or position in the market.
Preserve talent. Inventory your human capital and make sure that your most important and most promising executives are safely on board. See that they are not poached by the competition or demoralized by any layoffs in your firm. Freezing hiring, promotions and salaries should be a last resort, not a knee-jerk reaction.
Shop around. After minimizing your exposure, look at your competitors and at opportunities in your markets. If there are assets for sale, you may be able to obtain them now at advantageous terms.
Acquire talent. Thereís no better time than a recession to hire top talent. That said, donít take your new hires for granted. You want their maximum enthusiasm now and their lasting loyalty when the job market improves.
Cut fat, not muscle. Donít cut resources you may need later -- it could cost you more in the long term. Companies that ďinjudiciously slash marketing spending often find that they must spend far more than they saved in order to recover,Ē note Rhodes and Stelter.
Innovate. Tough times often create an innovation-stifling culture. The demand for short-term results can dampen fresh thinking and new ideas just when you need them most. Now is just the right time to develop new products and new strategies. Itís good for business and it helps increase employee and investor morale to boot.
Invest for tomorrow. Donít put off till tomorrow investments needed today in product development or technology. If you do, you may be caught flat-footed when the recovery comes.
Consider re-modeling. Use the downturn as an opportunity to rethink your business model. You may find that your markets are moving away from you. Now could be the time to find long-term growth in unexpected places.
Donít panic. Donít make hasty decisions or let bad news cloud your judgment. Be aggressive and measured, and use offense as well as defense.
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