Are you recession ready?
Updated: Nov 21, 2022
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With inflation rates hitting double digits in July and the Bank of England saying we’re already in recession, it’s a really tough time to be running a business right now. And let's not forget the challenges of skyrocketing energy costs and recruiting and retaining employees.
BUT DON’T LOSE HOPE! When times are tough, strong businesses thrive. As a business leader, you MUST take the time to assess the strengths and weaknesses of your business. You must look at the data, consult with key stakeholders and be decisive.
Don’t just assume you’ll be okay. When everyone else is getting ready for recession, adjusting their businesses and buying behaviour, it’s easy to get caught out by doing nothing.
Most leaders, when times are tough, take a pretty lax stance on making their business recession ready and focus only on cost reduction. But tough times require a much more involved process, taking time to understand the business and figure out where best you, as a leader, can take advantage to develop resilience, and build a stronger business.
Here are 5 mighty but manageable areas, as suggested by our partners, Mindshop, in their article, to leverage today’s challenges:
Cut costs – cost cutting is vital when the business is facing challenges. But avoid cutting in certain areas, whose importance is often overlooked, including strategic, process efficiency, customer satisfaction, and employee engagement. These areas contribute to the success of the business, and in cutting them you put yourself at severe risk of impacting your quality of work. This is very likely to alienate and upset customers and reduce revenue. An area you should investigate, however, is unprofitable customers and products/services. Many companies find that roughly 1 in 3 of their customers results in a loss of profit. So look for ways to make these customers more profitable and then, if you are unable, put your price up to them significantly. They’ll either stay, and generate profit, or leave. It’s a win-win. Do the same with products/services. Look to increase profitability, and cut them if it can’t be done.
Increase prices – simple, but often avoided. In times of inflation, customers understand when this happens. Be prepared to have to justify it though! Many customers will rather weather a price increase than change suppliers, as this often results in a cost by itself and most would prefer not to have to form new relationships and deal with the uncertainty.
Cashflow – where can you look to boost your cash flow? It’s the last thing you want to be worrying about, so look to pre-billing customers, changing payment terms, or securing financing to free up energy so you can continue satisfying customers.
Increase engagement – in tough times we rely on our key customers, supply chain partners, and key employees, so double down on making sure they’re all engaged and will stay. Where you can, consider their wants and needs, the things that drive them and will make them want to stay with you. Key elements here include support, mutual benefits, and even having more fun. (Ask us about Motivational Maps for a powerful tool that will reveal all of this information so that you can create more motivated and engaged teams!)
Focus on the medium to long-term vision – things aren’t going back to normal soon, so review your vision for the next 2-3 years to ensure ongoing success. What is your purpose? What products/services will you sell? How will you price them? How will you lock in profit, and how will you grow?
You should also be aware of the existing strengths and weaknesses within your business, so you know where to focus your efforts, and where you can relax a bit knowing your processes and infrastructure will hold up.
What can leaders do to boost employee retention and wellbeing, whilst maintaining high levels of productivity? Susannah is an expert in leadership development and getting the best out of your team. She recommends leaders focus on these 4 areas first:
Identify your current and future A-Players - the team members you’d re-recruit in a heartbeat, that deliver strong results and are contributing to the current and future success. Who contributes the most to your competitive sustainable advantage, customer satisfaction, productivity, employee engagement, and efficiency? Who do you enjoy working with because they keep their promises, co-create improvements & products, challenge your thinking, and have your back?
Avoid neglecting your A- and B-Players - they’re reliable and independent, but they still need to feel involved, be challenged and given opportunities to do new things and develop their knowledge and skills. Consider new responsibilities with leadership or tasks (as long as they are properly rewarded), opportunities to learn new skills, or to take on a teaching role with other employees.
Check-in regularly with your team - are they okay with changing and challenging situations? Find out what motivates them, and ensure their wants and needs are met so they’ll thrive, perform, and stay*.
Ensure you do the same for yourself - make sure you recognise your own achievements and that your wants and needs are being met. Take some time in the morning to get yourself into a winning mindset, whether that’s reflecting, exercising or being creative.
*If you want help with this, get in touch.
(By the way, in November, we’re running another open course for our award-winning Liberating Leadership Programme to accelerate the confidence and capability of leaders and managers. Learn more and enquire now here!)
Be aware of our stress levels and those of our team. Here’s a useful extract from the new course Susannah’s creating on Personal Resilience.
“The Stress Bucket is a wonderful model. Imagine a bucket, as basic or as glittery as you like. Add two taps at the bottom, and one at the top, and fill it with all your tasks, responsibilities, and problems. Is your bucket full, or is there room for more?
When our Stress Bucket is full, we can feel overwhelmed and that things are out of our control. It’s very useful to recognise our own symptoms of stress, as well as other people’s. Some people get headaches, spots, cold sores, or tense shoulders. Some find they have little patience or tolerance for people. Some struggle with sleep. Some want to eat or drink more, to be alone or to be distracted and busy. When we notice our symptoms increasing, we can take action before our Stress Bucket overflows or bursts.
Imagine that attached to our Stress Bucket are three taps. One tap is a pressure-relief valve which is opened by distractions. Another is opened through unhealthy habits. This is a false tap, which appears to reduce stress but actually increases it long-term. The third is opened through healthy habits.
Distractions are a useful way to lower the pressure in our Stress Bucket, to create a little more time and space to get things resolved. E.g. binge-watching box sets, nibbling, occasional drinking and focussing on work. If you’re doing it to avoid feeling stressed or out of control, then recognise it’s a distraction with a temporary effect.
Unhealthy habits are similar to distractions but taken to an extreme level, e.g. excessive drinking, substance misuse, overspending, over-working, excessive risk-taking
Healthy habits are the ideal way to balance your stress levels and strengthen and expand your Stress Bucket so you can handle more without feeling overwhelmed. These include exercise, quality sleep, time with people who support and encourage us, fun activities, talking and listening, meditation and happy music.
Question: How full is your Stress Bucket? What are you doing to reduce your stress? What healthy habits can you start today?
Take an Aspirin
In November, we’re running another open course for our award-winning Liberating Leadership Programme to accelerate the confidence and capability of 8 leaders and managers.
The programme is based on 25 years of research into the beliefs and behaviours of high-performing leaders of all kinds of organisations. The research discovered the shared beliefs and behaviours that create high performance and captured them into a framework of 4 Steps, 15 Skills and a ‘high-performance’ mindset, that has courtesy, respect and high expectations at its core.
Supported by 4 diagnostics to compare your own leadership beliefs and behaviours to the research, this programme is delivered over six weekly, 2.5-hour online workshops. Not only does it fit more easily into busy schedules, and enable remote leaders to learn together, it provides time between each workshop to embed new knowledge and implement what’s been learned.
P.S. We also offer a fast-track option for 1-2 people who just can’t wait to get going! Just enquire now via the link above.
Thank you for reading, and we’ll see you next month!
Team Aspirin - Susannah, Heath and Kyle