3 tips to proactively prepare your business for a recession
Note: The following blog post was submitted by the team at Delegate Solutions, a strategic partner of the MACPA and the Business Learning Institute. Learn more at DelegateSolutions.com.
By Emily Morgan and Mark O'Donnell, EOSI
A strong economy has been a welcome season for business owners. It has allowed us to grow and scale our companies with ease and comfort. Many believe that an impactful recession is bound to come at some point soon, given that recessions occur on average every five to six years.
A business owner who remains aware of this and prepares their business as if it could be tomorrow will ultimately run a better business instead of letting the economic shifts “just happen to them.” There are a few ways that you can prepare your company for this change.
1: Right people, right seat
Build your business with a “Right Person, Right Seat” mentality. Your people are your most valuable resource, and taking the time to ensure that they “get it, want it and have the capacity” to do the job will help shore up the foundation of your business.
2: Focus on leading indicators
When looking at your numbers, be sure to include a review of leading indicators to ensure you’ll know when the economy is turning before your competition. This means reviewing your data each week, instead of quarterly or annually doing a review of your P&L. For example, you can count the number of meetings being set by your sales team, rather than counting the number of meetings that have already occurred. Using this leading data helps you gain better insight and control rather than finding out when it’s too late and having to react.
3: Use EOS® principles and outsourcing to protect
Entrepreneurial leader Gino Wickman teaches about using a “Reverse Accountability Chart.” The concept? Rather than building six to 12 months out, build as though half your revenue disappeared tomorrow. Think about who would you keep vs. not, and what would you outsource. That will give you a better picture of your worst-case scenario.
By utilizing outsourced / contract resources, you can create elasticity in your accountability chart as the business grows and changes. You can also take advantage of finding the best talent if you are able to layer in virtual resources that are not limited by geography or the local economy. A strategy of 80 percent FTE and 20 percent outsourced contract staff helps make the organization more pliable and durable to survive shifts in the business climate.
Use these strategies to take control over what is happening in your business, rather than letting the economy just happen to you. Implementing them with a regular cadence can help better predict, stabilize, or even allow you to take market share as things change.