The Harvard Business Review (HBR) is suggesting now is the time to plan for the next economic downturn. Leading economic indicators are pointing downward. When an economic downturn takes place and you are in the thick of it, you will need to focus on tactics and day to day operations.
Now is the time to think strategically and to begin to take actions.
The (HBR) article suggests we have seen one of the longest expansionary phases in recent history and in the next 12 to 24 months we are likely to see an economic downturn. The article also suggest
we tend to prepare too little and too late.
I am writing this now to give you some ideas on how collaboration now can help you in the future.
From this article I am suggesting you need to consider economic, and social impacts. Of course, you will explore the economic impacts. That is the bottom line. However, begin now to consider the social and human side of an economic downturn too. Who should I be reaching out to and what actions should I be taking now for my firm and for yourself? Be sure to consider both as you explore your future.
One of the keys to building trust is to have open discussions. That’s right being straightforward and honest by being transparent with others. Have open discussions.
Let others know what you are thinking.
Be careful here. Share with those you trust. Don't be a naysayer, but consider the possibilities. If there were to be an economic downturn what might happen? What does that mean to me, those reporting to me, my employees, my boss, my peers, the firm, our vendors, our customers and our stakeholders.
This does not mean dire circumstances and in fact some industries will do even better. That’s right even better. For example, when there is an economic downturn, more individuals tend to hold on to their cars longer and do more repairs themselves. That means for example in an economic downturn, automobile auto parts stores see an uptake in sales. That’s on the positive side.
Where does your firm fit in and how about your postion?
These are very real questions to consider.
According to the article,
the firms that considered ramifications before the last downturn provided 6% better return than those that did not.
The key was to address the situation early. These are the firms that continually think long term. I am suggesting you need to do this too exploring your firm and your own personal trajectory.
If you follow this blog you know that I recommend taking a couple of hours every three months at the start of a new quarter and reflect on where you want to be 2 years from now. What do you need to keep doing, what do you need to stop doing and what do you need to start doing?
Typically, we feel ready to address what we need to keep doing and what we need to start, but not necessarily what we need to stop.
There are only so many hours in each day. If you are going to start something that takes more time what are you prepared to stop?
Isn’t it true that often management simply adds on more and says we need to do more with less? This is a reality and at the same time it can be a short-sighted approach. Employees can and do burn out. The pro-active firms, really look at this last question and seriously look at what can we stop doing. Processes are often in place with add-ons. Do you stop and ask if that report is really needed? Could we automate more of our processes? Do we need to carry out this activity at all or in that way?
Be prepared to look at everything and determine what needs to stay, where we need to contract and where we need to potentially expand.
Focus on the future
If we want to grow our firm and our careers what do we need to do? During an expansion time in the economy, we can look like geniuses when all boats are rising with the tide. During an economic downturn, where are the opportunities?
As a business valuer, may there be more work in bankruptcies, divorce work, mergers via liquidations and other similar areas?
As a business valuer what steps should you take now to prepare for this type of work? Is there training needed now in anticipation of an economic downturn? Will you be in a position to address the needs of your future client base?
Focus on the future now and that may direct you to what actions you need to take now.
Don’t starve, prepare for growth
The HBR article suggests that companies with current high debt, high fixed assets, less liquidity, and less ability to adapt are at the greatest risk.
Those that realize this now can plan accordingly and take steps to address these types of concerns.
Look at yourself personally as well. Look at your lifestyle, spending habits, and the potential impacts going forward. In a downcycle many return to school to upgrade skills. Do you need to be ahead of the curve and plan for opportunities in the future after the downturn?
Invest in your company and your own personal R&D. Be innovative. This will definitely prepare you better for the long run.
Collaboration is the key
Of course, you would not expect commentary from this blog without consideration to collaboration. I emphasize taking advantage of The Collaboration Effect to enhance relationships, resources, and revenues. By connecting relationships now, actively listening to others, educating others judiciously on your interests and concerns, and negotiating closure proactively, you can prepare for the future.
Think of this economically, technologically, socially and environmentally. Who might you need to partner with and collaborate with in an economic downturn? Think of all stakeholders. Now is the time to build that relationship and actively listen to their concerns so that you can partner with them if there were to be an economic downturn.
If you want to come out stronger and better on the other end of the economic downturn what should you do?
Now is the time to pause, think strategically, and take actions for your firm and yourself.
This will prepare you and your firm for such an event and to come out even better on the other side. Collaboration now and into the future is key.
About the author
Mike Gregory is an expert on conflict resolution business to government (IRS), business to business, and within businesses. Mike is an international speaker and he has written 11 books including Business Valuations and the IRS: Five Books in One, The Servant Manager and Peaceful Resolutions. Mike may be contacted directly at firstname.lastname@example.org and at (651) 633-5311. [Michael Gregory, ASA, CVA, NSA, MBA, Qualified Mediator with the Minnesota Supreme Court]